##### Table of Contents

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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 September 30, 2007
| | -------------------------------------------------

OR



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



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

Commission File Number:
333-62916-02



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MISSION BROADCASTING, INC.

(Exact name of registrant as specified in its charter)



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|                                                             |  |                                                     
|------------------------------------------------------------ |  | ----------------------------------------------------
|Delaware                                                     |  | 51-0388022                                          
|(State of Organization or Incorporation)                     |  | (IRS Employer Identification No.)                   
|                                                             | 
|7650 Chippewa Road, Suite 305 Brecksville, Ohio 44141        |  | (440) 526-2227                                      
|(Address of Principal Executive Offices, including Zip Code) |  | (Registrants Telephone Number, Including Area Code)



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

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

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer  x

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

As of September 30, 2007, Mission Broadcasting, Inc. had one shareholder, David S. Smith. Mr. Smith held all 1,000 shares of the
outstanding common stock of Mission Broadcasting, Inc. at September 30, 2007. As of October 31, 2007, Mission Broadcasting, Inc. had 1,000 shares of outstanding common stock.



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##### Table of Contents

TABLE OF CONTENTS



|              |  |                                                                                                      |  |     
|------------- |  | ---------------------------------------------------------------------------------------------------- |  | ----
|              |  |                                                                                                      |  | Page
|              |  |                                                                                                     
|PART I        |  | FINANCIAL INFORMATION                                                                                |  |     
|              |  |                                                                                                     
|ITEM 1.       |  | Financial Statements (Unaudited)                                                                     |  |     
|              |  |                                                                                                     
|              |  | Condensed Balance Sheets at September 30, 2007 and December 31, 2006                                 |  | 1   
|              |  |                                                                                                     
|              |  | Condensed Statements of Operations for the three and nine months ended September 30, 2007 and 2006   |  | 2   
|              |  |                                                                                                     
|              |  | Condensed Statement of Changes in Shareholders Deficit for the nine months ended September 30, 2007 |  | 3   
|              |  |                                                                                                     
|              |  | Condensed Statements of Cash Flows for the nine months ended September 30, 2007 and 2006             |  | 4   
|              |  |                                                                                                     
|              |  | Notes to Condensed Financial Statements                                                              |  | 5   
|              |  |                                                                                                     
|ITEM 2.       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                |  | 13  
|              |  |                                                                                                     
|ITEM 3.       |  | Quantitative and Qualitative Disclosures about Market Risk                                           |  | 20  
|              |  |                                                                                                     
|ITEM 4.       |  | Controls and Procedures                                                                              |  | 21  
|              |  |                                                                                                     
|PART II       |  | OTHER INFORMATION                                                                                    |  |     
|              |  |                                                                                                     
|ITEM 1.       |  | Legal Proceedings                                                                                    |  | 22  
|              |  |                                                                                                     
|ITEM 1A.      |  | Risk Factors                                                                                         |  | 22  
|              |  |                                                                                                     
|ITEM 2.       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                          |  | 22  
|              |  |                                                                                                     
|ITEM 3.       |  | Defaults Upon Senior Securities                                                                      |  | 22  
|              |  |                                                                                                     
|ITEM 4.       |  | Submission of Matters to a Vote of Security Holders                                                  |  | 22  
|              |  |                                                                                                     
|ITEM 5.       |  | Other Information                                                                                    |  | 22  
|              |  |                                                                                                     
|ITEM 6.       |  | Exhibits                                                                                             |  | 22  
|              | 
|EXHIBIT INDEX |  |                                                                                                     



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##### Table of Contents

PART I. FINANCIAL INFORMATION



|ITEM 1. | Financial Statements
|------- | --------------------

MISSION BROADCASTING, INC.

CONDENSED BALANCE SHEETS

(in thousands, except share information)



|                                                                                                                                          |  |                    |         |   |                   |   |         |  
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | -
|                                                                                                                                          |  | September 30, 2007 |         |   | December 31, 2006 |  
|                                                                                                                                          |  | (Unaudited)        |        
|ASSETS                                                                                                                                    |  |                    |         |   |                   |   |         |  
|Current assets:                                                                                                                           |  |                    |         |   |                   |   |         |  
|Cash and cash equivalents                                                                                                                 |  | $                  | 2,531   |   |                   | $ | 3,577   |  
|Accounts receivable (allowance for doubtful accounts of $0 and $0, respectively)                                                          |  |                    | 724     |   |                   |   | 619     |  
|Current portion of broadcast rights                                                                                                       |  |                    | 3,777   |   |                   |   | 2,919   |  
|Prepaid expenses and other current assets                                                                                                 |  |                    | 205     |   |                   |   | 145     |  
|Deferred tax asset                                                                                                                        |  |                    | 8       |   |                   |   | 2       |  
|                                                                                                                                          |  |                    |         |   |                   |   |         |  
|Total current assets                                                                                                                      |  |                    | 7,245   |   |                   |   | 7,262   |  
|                                                                                                                                          |  |                   
|Property and equipment, net                                                                                                               |  |                    | 19,665  |   |                   |   | 20,420  |  
|Broadcast rights                                                                                                                          |  |                    | 2,534   |   |                   |   | 2,121   |  
|FCC licenses                                                                                                                              |  |                    | 28,736  |   |                   |   | 28,736  |  
|Goodwill                                                                                                                                  |  |                    | 17,122  |   |                   |   | 16,651  |  
|Other intangible assets, net                                                                                                              |  |                    | 37,700  |   |                   |   | 42,201  |  
|Other noncurrent assets                                                                                                                   |  |                    | 607     |   |                   |   | 253     |  
|Deferred tax asset                                                                                                                        |  |                    | 361     |   |                   |   | 82      |  
|                                                                                                                                          |  |                    |         |   |                   |   |         |  
|Total assets                                                                                                                              |  | $                  | 113,970 |   |                   | $ | 117,726 |  
|                                                                                                                                          |  |                    |         |   |                   |   |         |  
|LIABILITIES AND SHAREHOLDERS DEFICIT                                                                                                     |  |                    |         |   |                   |   |         |  
|Current liabilities:                                                                                                                      |  |                    |         |   |                   |   |         |  
|Current portion of debt                                                                                                                   |  | $                  | 1,727   |   |                   | $ | 1,727   |  
|Current portion of broadcast rights payable                                                                                               |  |                    | 3,859   |   |                   |   | 3,028   |  
|Taxes payable                                                                                                                             |  |                    | 49      |   |                   |   |        |  
|Accounts payable                                                                                                                          |  |                    | 266     |   |                   |   | 379     |  
|Accrued expenses                                                                                                                          |  |                    | 752     |   |                   |   | 997     |  
|Interest payable                                                                                                                          |  |                    | 99      |   |                   |   | 102     |  
|Deferred revenue                                                                                                                          |  |                    | 967     |   |                   |   | 886     |  
|Due to Nexstar Broadcasting, Inc.                                                                                                         |  |                    | 18,754  |   |                   |   | 20,167  |  
|                                                                                                                                          |  |                    |         |   |                   |   |         |  
|Total current liabilities                                                                                                                 |  |                    | 26,473  |   |                   |   | 27,286  |  
|                                                                                                                                          |  |                   
|Debt                                                                                                                                      |  |                    | 167,519 |   |                   |   | 168,814 |  
|Broadcast rights payable                                                                                                                  |  |                    | 3,129   |   |                   |   | 2,467   |  
|Deferred tax liabilities                                                                                                                  |  |                    | 6,746   |   |                   |   | 5,746   |  
|Deferred revenue                                                                                                                          |  |                    | 400     |   |                   |   | 337     |  
|Deferred gain on sale of assets                                                                                                           |  |                    | 2,127   |   |                   |   | 2,258   |  
|Other liabilities                                                                                                                         |  |                    | 1,444   |   |                   |   | 2,765   |  
|                                                                                                                                          |  |                    |         |   |                   |   |         |  
|Total liabilities                                                                                                                         |  |                    | 207,838 |   |                   |   | 209,673 |  
|                                                                                                                                          |  |                    |         |   |                   |   |         |  
|                                                                                                                                          |  |                   
|Commitments and contingencies                                                                                                             |  |                    |         |   |                   |   |         |  
|                                                                                                                                          |  |                   
|Shareholders deficit:                                                                                                                    |  |                    |         |   |                   |   |         |  
|Common stock, $1 par value; 1,000 shares authorized; 1,000 shares issued and outstanding at both September 30, 2007 and December 31,
2006 |  |                    | 1       |   |                   |   | 1       |  
|Subscription receivable                                                                                                                   |  |                    | (1      | ) |                   |   | (1      | )
|Accumulated deficit                                                                                                                       |  |                    | (93,868 | ) |                   |   | (91,947 | )
|                                                                                                                                          |  |                    |         |   |                   |   |         |  
|Total shareholders deficit                                                                                                               |  |                    | (93,868 | ) |                   |   | (91,947 | )
|                                                                                                                                          |  |                    |         |   |                   |   |         |  
|Total liabilities and shareholders deficit                                                                                               |  | $                  | 113,970 |   |                   | $ | 117,726 |  
|                                                                                                                                          |  |                    |         |   |                   |   |         |  

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



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##### Table of Contents

MISSION BROADCASTING, INC.

CONDENSED STATEMENTS OF OPERATIONS

(in thousands)



|                                                                                                                  |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|----------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ------ | - | ------------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                                                  |  | Three Months Ended September 30, |        |   | Nine Months Ended September 30, |  
|                                                                                                                  |  | 2007                             |        |   | 2006                            |   |        | 2007 |  |   | 2006   |  
|                                                                                                                  |  | (Unaudited)                      |        |   | (Unaudited)                     |  
|Net broadcast revenue                                                                                             |  | $                                | 1,679  |   |                                 | $ | 1,404  |      |  | $ | 5,005  |   |  | $ | 4,152  |  
|Revenue from Nexstar Broadcasting, Inc.                                                                           |  |                                  | 7,206  |   |                                 |   | 7,836  |      |  |   | 22,352 |   |  |   | 22,620 |  
|                                                                                                                  |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Net revenue                                                                                                       |  |                                  | 8,885  |   |                                 |   | 9,240  |      |  |   | 27,357 |   |  |   | 26,772 |  
|                                                                                                                  |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|                                                                                                                  |  |                                  |        |  
|Operating expenses (income):                                                                                      |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Direct operating expenses (exclusive of depreciation and amortization shown separately below)                     |  |                                  | 1,292  |   |                                 |   | 1,189  |      |  |   | 3,808  |   |  |   | 3,493  |  
|Selling, general, and administrative expenses (exclusive of depreciation and amortization shown separately below) |  |                                  | 552    |   |                                 |   | 626    |      |  |   | 1,715  |   |  |   | 1,716  |  
|Fees incurred pursuant to local service agreements with Nexstar Broadcasting, Inc.                                |  |                                  | 1,965  |   |                                 |   | 1,955  |      |  |   | 5,895  |   |  |   | 5,855  |  
|Amortization of broadcast rights                                                                                  |  |                                  | 1,277  |   |                                 |   | 1,116  |      |  |   | 3,160  |   |  |   | 2,929  |  
|Amortization of intangible assets                                                                                 |  |                                  | 1,332  |   |                                 |   | 1,349  |      |  |   | 4,030  |   |  |   | 4,047  |  
|Depreciation                                                                                                      |  |                                  | 807    |   |                                 |   | 818    |      |  |   | 2,470  |   |  |   | 2,472  |  
|Gain on asset exchange                                                                                            |  |                                  | (317   | ) |                                 |   |       |      |  |   | (317   | ) |  |   |       |  
|Loss (gain) on asset disposal, net                                                                                |  |                                  | (1     | ) |                                 |   |       |      |  |   | 4      |   |  |   | 7      |  
|                                                                                                                  |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Total operating expenses                                                                                          |  |                                  | 6,907  |   |                                 |   | 7,053  |      |  |   | 20,765 |   |  |   | 20,519 |  
|                                                                                                                  |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|                                                                                                                  |  |                                  |        |  
|Income from operations                                                                                            |  |                                  | 1,978  |   |                                 |   | 2,187  |      |  |   | 6,592  |   |  |   | 6,253  |  
|Interest expense, including amortization of debt financing costs                                                  |  |                                  | (3,106 | ) |                                 |   | (3,257 | )    |  |   | (9,310 | ) |  |   | (9,129 | )
|Interest income                                                                                                   |  |                                  | 23     |   |                                 |   | 15     |      |  |   | 61     |   |  |   | 40     |  
|                                                                                                                  |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Loss before income taxes                                                                                          |  |                                  | (1,105 | ) |                                 |   | (1,055 | )    |  |   | (2,657 | ) |  |   | (2,836 | )
|                                                                                                                  |  |                                  |        |  
|Income tax expense                                                                                                |  |                                  | (356   | ) |                                 |   | (332   | )    |  |   | (764   | ) |  |   | (884   | )
|                                                                                                                  |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Net loss                                                                                                          |  | $                                | (1,461 | ) |                                 | $ | (1,387 | )    |  | $ | (3,421 | ) |  | $ | (3,720 | )
|                                                                                                                  |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  

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



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##### Table of Contents

MISSION BROADCASTING, INC.

CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS DEFICIT

For the Nine Months Ended September 30, 2007

(in thousands, except share information)



|                                                            |        |              |           |                         |   |  |                     |    |   |                             |   |         |   |  |   |         |  
|----------------------------------------------------------- | ------ | ------------ | --------- | ----------------------- | - |  | ------------------- | -- | - | --------------------------- | - | ------- | - |  | - | ------- | -
|                                                            |        | Common Stock |           | Subscription Receivable |   |  | Accumulated Deficit |    |   | Total Shareholders Deficit |  
|                                                            | Shares |              | Par Value |                         |   | 
|Balance at January 1, 2007 (Unaudited)                      |        | 1,000        |           | $                       | 1 |  | $                   | (1 | ) |                             | $ | (91,947 | ) |  | $ | (91,947 | )
|Adjustment for the cumulative effect of adopting FIN No. 48 |        |             |           |                         |  |  |                     |   |   |                             |   | 1,500   |   |  |   | 1,500   |  
|Net loss                                                    |        |             |           |                         |  |  |                     |   |   |                             |   | (3,421  | ) |  |   | (3,421  | )
|                                                            |        |              |           |                         |   |  |                     |    |   |                             |   |         |   |  |   |         |  
|Balance at September 30, 2007 (Unaudited)                   |        | 1,000        |           | $                       | 1 |  | $                   | (1 | ) |                             | $ | (93,868 | ) |  | $ | (93,868 | )
|                                                            |        |              |           |                         |   |  |                     |    |   |                             |   |         |   |  |   |         |  

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



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##### Table of Contents

MISSION BROADCASTING, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)



|                                                                                |  |                                 |        |   |      |   |        |  
|------------------------------------------------------------------------------- |  | ------------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                |  | Nine Months Ended September 30, |       
|                                                                                |  | 2007                            |        |   | 2006 |  
|                                                                                |  | (Unaudited)                     |       
|Cash flows from operating activities:                                           |  |                                 |        |   |      |   |        |  
|Net loss                                                                        |  | $                               | (3,421 | ) |      | $ | (3,720 | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                                 |        |   |      |   |        |  
|Deferred income taxes                                                           |  |                                 | 715    |   |      |   | 883    |  
|Depreciation of property and equipment                                          |  |                                 | 2,470  |   |      |   | 2,472  |  
|Amortization of intangible assets                                               |  |                                 | 4,030  |   |      |   | 4,047  |  
|Amortization of debt financing costs                                            |  |                                 | 33     |   |      |   | 71     |  
|Amortization of broadcast rights, excluding barter                              |  |                                 | 1,455  |   |      |   | 1,394  |  
|Payments for broadcast rights                                                   |  |                                 | (1,229 | ) |      |   | (1,300 | )
|Gain on asset exchange                                                          |  |                                 | (317   | ) |      |   |       |  
|Loss on asset disposal, net                                                     |  |                                 | 4      |   |      |   | 7      |  
|Deferred gain recognition                                                       |  |                                 | (131   | ) |      |   | (130   | )
|Changes in operating assets and liabilities:                                    |  |                                 |        |   |      |   |        |  
|Accounts receivable                                                             |  |                                 | (105   | ) |      |   | (318   | )
|Prepaid expenses and other current assets                                       |  |                                 | (60    | ) |      |   | (87    | )
|Other noncurrent assets                                                         |  |                                 | (4     | ) |      |   | (5     | )
|Taxes payable                                                                   |  |                                 | 49     |   |      |   |       |  
|Accounts payable and accrued expenses                                           |  |                                 | (358   | ) |      |   | 372    |  
|Interest payable                                                                |  |                                 | (3     | ) |      |   | 8      |  
|Deferred revenue                                                                |  |                                 | 144    |   |      |   | 423    |  
|Other noncurrent liabilities                                                    |  |                                 | 179    |   |      |   | 210    |  
|Due to Nexstar Broadcasting, Inc.                                               |  |                                 | (1,413 | ) |      |   | (2,262 | )
|                                                                                |  |                                 |        |   |      |   |        |  
|Net cash provided by operating activities                                       |  |                                 | 2,038  |   |      |   | 2,065  |  
|                                                                                |  |                                 |        |   |      |   |        |  
|Cash flows from investing activities:                                           |  |                                 |        |   |      |   |        |  
|Additions to property and equipment                                             |  |                                 | (1,409 | ) |      |   | (1,201 | )
|Proceeds from sale of assets                                                    |  |                                 | 7      |   |      |   | 10     |  
|Down payment on acquisition of station                                          |  |                                 | (387   | ) |      |   |       |  
|                                                                                |  |                                 |        |   |      |   |        |  
|Net cash used for investing activities                                          |  |                                 | (1,789 | ) |      |   | (1,191 | )
|                                                                                |  |                                 |        |   |      |   |        |  
|Cash flows used for financing activities:                                       |  |                                 |        |   |      |   |        |  
|Repayment of long-term debt                                                     |  |                                 | (1,295 | ) |      |   | (1,295 | )
|                                                                                |  |                                 |        |   |      |   |        |  
|Net decrease in cash and cash equivalents                                       |  |                                 | (1,046 | ) |      |   | (421   | )
|Cash and cash equivalents at beginning of period                                |  |                                 | 3,577  |   |      |   | 1,404  |  
|                                                                                |  |                                 |        |   |      |   |        |  
|Cash and cash equivalents at end of period                                      |  | $                               | 2,531  |   |      | $ | 983    |  
|                                                                                |  |                                 |        |   |      |   |        |  
|                                                                                |  |                                
|Supplemental schedule of cash flow information:                                 |  |                                 |        |   |      |   |        |  
|Cash paid during the period for:                                                |  |                                 |        |   |      |   |        |  
|Interest                                                                        |  | $                               | 9,280  |   |      | $ | 9,051  |  
|                                                                                |  |                                 |        |   |      |   |        |  
|Income taxes, net                                                               |  | $                               |       |   |      | $ |       |  
|                                                                                |  |                                 |        |   |      |   |        |  
|                                                                                |  |                                
|Non-cash investing activities:                                                  |  |                                 |        |   |      |   |        |  
|Equipment acquired from asset exchange                                          |  | $                               | 323    |   |      | $ |       |  
|                                                                                |  |                                 |        |   |      |   |        |  

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



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

1. Organization and Business Operations

As of
September 30, 2007, Mission Broadcasting, Inc. (Mission or the Company) owned and operated 15 television stations, all of which are affiliated with the NBC, ABC, CBS, Fox or MyNetworkTV television networks, in markets
located in New York, Pennsylvania, Illinois, Indiana, Missouri, Texas and Montana. The Company operates in one reportable television broadcasting segment. Through local service agreements, Nexstar Broadcasting, Inc. (Nexstar) provides
sales and operating services to all of the Mission television stations (see Note 3). As more fully described in Note 11, Missions sole shareholder has granted Nexstar purchase options to acquire the assets and assume the liabilities of each
Mission station, subject to Federal Communications Commission (FCC) consent.

The Company is highly leveraged, which makes it
vulnerable to changes in general economic conditions. The Companys ability to repay or refinance its debt will depend on, among other things, financial, business, market, competitive and other conditions, many of which are beyond its control,
as well as Nexstar maintaining its pledge to continue the local service agreements with the Companys stations.

On May 17, 2007,
Nexstar Broadcasting Group, Inc. announced that its Board of Directors decided to engage Goldman, Sachs & Co. to assist it in reviewing strategic alternatives including, but not limited to, the sale of Nexstar. On August 3, 2007, in
light of the difficult conditions in the financing markets, Nexstar Broadcasting Group, Inc.s Board of Directors, in consultation with its financial advisor Goldman, Sachs & Co., decided to suspend discussions with prospective
acquirers of Nexstar. At this time, it is not possible to determine what, if any, impact this may have on Mission.

2. Summary of Significant Accounting
Policies

Interim Financial Statements

The condensed financial statements as of September 30, 2007, and for the three and nine months ended September 30, 2007 and 2006 are unaudited. However, in the opinion of management, such financial
statements include all adjustments (consisting solely of normal recurring adjustments) necessary for the fair statement of the financial information included herein in accordance with accounting principles generally accepted in the United States of
America (U.S. GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission. The preparation of the condensed financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the period. Actual results
could differ from those estimates. Results of operations for interim periods are not necessarily indicative of results for the full year. These financial statements should be read in conjunction with the financial statements and related notes
included in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2006. The balance sheet at December 31, 2006 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.

Adoption of FIN No. 48

On January 1, 2007, the Company adopted FIN No. 48, Accounting for Uncertainty in Income Taxes, an interpretation
of FASB Statement No. 109 (FIN No. 48) which clarifies whether the benefit of tax positions taken in a filed tax return, or expected to be taken in a future tax return, should be reflected in income tax expense in the
financial statements. FIN No. 48 requires that the benefit from an uncertain tax position be recognized in the financial statements only if it is more likely than not that the tax position will be sustained, based on its technical merits, upon
examination by a taxing authority. The amount recognized in the financial statements from an uncertain tax position is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. To
the extent a tax return position has not been reflected in the financial statements, a liability (unrecognized tax benefit) is recorded. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income
tax expense, which is consistent with its recognition of these items in prior period financial statements. As a result of adopting FIN No. 48, the Company recorded a $1.5 million decrease to other liabilities and a cumulative-effect adjustment
decreasing the January 1, 2007 balance of accumulated deficit by a corresponding amount. See Note 9 for further discussion of the Companys unrecognized tax benefits.



Nonmonetary Asset Exchanges

In connection with a spectrum allocation exchange ordered by the FCC within the 1.9 GHz band, Sprint Nextel Corporation
(Nextel) is required to replace certain existing analog equipment with comparable digital equipment. The Company has agreed to accept the substitute equipment that Nextel will provide and in turn must relinquish its existing equipment to
Nextel. Neither party will have any continuing involvement in the equipment transferred following the exchange. We account for this arrangement as an exchange of assets in accordance with Accounting Principles Board No. 29, Accounting for
Nonmonetary Transactions, as amended by SFAS



5



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)



2. Summary of Significant Accounting Policies(Continued)



No. 153, Exchanges of Nonmonetary Assets. The equipment the Company receives under this arrangement is recorded at their estimated fair
market value and depreciated over estimated useful lives ranging from 5 to 15 years. Managements determination of the fair market value is derived from quoted prices obtained from manufacturers and vendors for the specific equipment acquired.
As equipment is exchanged, the Company records a gain to the extent that the fair market value of the equipment received exceeds the carrying amount of the equipment relinquished.

Basis of Presentation

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

Recent Accounting
Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value
Measurements (SFAS No. 157), which addresses how companies should determine fair value when they are required to use a fair value measure for recognition or disclosure purposes under generally accepted accounting principles.
SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Under SFAS No. 157, the definition of fair value retains the exchange price notion in
earlier definitions of fair value, but clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for
the asset or liability. The transaction to sell the asset or transfer the liability is a hypothetical transaction at the measurement date, considered from the perspective of a market participant that holds the asset or owes the liability. SFAS
No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, which is the Companys 2008 fiscal year. The Company will adopt this Statement in
the first quarter 2008. Management is currently evaluating the impact of adopting SFAS No. 157, but does not presently anticipate it will have a material effect on its financial position or results of operations.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB No. 115 (SFAS No. 159), which provides a fair value measurement option for eligible financial assets and liabilities. Under SFAS No. 159, an entity is
permitted to elect to apply fair value accounting to a single eligible item, subject to certain exceptions, without electing it for other identical items. Subsequent unrealized gains and losses on items for which the fair value option has been
elected will be included in earnings. The fair value option established by this Statement is irrevocable, unless a new election date occurs. This standard reduces the complexity in accounting for financial instruments and mitigates volatility in
earnings caused by measuring related assets and liabilities differently. SFAS No. 159 is effective as of the beginning of an entitys first fiscal year beginning after November 15, 2007 which for the Company is January 1, 2008.
The Company will adopt the provisions of this Statement beginning in fiscal 2008. Management is currently evaluating the impact the adoption of SFAS No. 159 will have on the Companys financial statements, but does not presently anticipate
it will have a material effect on its financial position or results of operations.

3. Local Service Agreements with Nexstar

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

The arrangements under the local service agreements each Mission station has entered into with Nexstar has had the effect of Nexstar receiving
substantially all of the available cash, after Missions payment of operating costs and debt service, generated by the Companys stations. Mission anticipates that Nexstar will continue to receive substantially all of Missions
available cash, after payments for operating costs and debt service, generated by its stations.



On August 28, 2006, Mission entered into a TBA with Nexstar and the Company began providing Fox network programming to Nexstar-owned KFTA Channel 24 (Fort Smith, Arkansas) in exchange for monthly payments of $5
thousand to Nexstar. Also under the TBA, Nexstar began selling all advertising time during the Fox programming time periods in exchange for monthly payments of $20 thousand to Mission. The TBA will terminate upon the assignment of KFTAs FCC
license from Nexstar (see Note 4).



6



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)



3. Local Service Agreements with Nexstar(Continued)



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

The following table summarizes the
various local service agreements Mission had in effect with Nexstar as of September 30, 2007:



|               |  |                                               |  |             |  |                   |  |            |  |                                                                                   
|-------------- |  | --------------------------------------------- |  | ----------- |  | ----------------- |  | ---------- |  | ----------------------------------------------------------------------------------
|Station        |  | Market                                        |  | Affiliation |  | Type of Agreement |  | Expiration |  | Consideration received from or paid to Nexstar                                    
|Mission-Owned: |  |                                               |  |             |  |                   |  |            |  |                                                                                   
|               |  |                                               |  |             | 
|WFXP           |  | Erie, PA                                      |  | Fox         |  | TBA               |  | 8/16/11    |  | Monthly payments received from Nexstar(1)                                         
|               |  |                                               |  |             | 
|KJTL and       |  | Wichita Falls, TX-Lawton, OK                  |  | Fox         |  | SSA               |  | 5/31/09    |  | $60 thousand per month paid to Nexstar                                            
|KJBO-LP        |  |                                               |  | MyNetworkTV |  | JSA               |  | 5/31/09    |  | 70% of the KJTL/KJBO-LP net revenue collected each month received from Nexstar    
|               |  |                                               |  |             | 
|WYOU           |  | Wilkes Barre-Scranton, PA                     |  | CBS         |  | SSA               |  | 1/4/08     |  | $110 thousand per month paid to Nexstar                                           
|               |  |                                               |  |             |  | JSA               |  | 9/30/14    |  | 70% of the WYOU net revenue collected each month received from Nexstar            
|               |  |                                               |  |             | 
|KODE           |  | Joplin, MO-Pittsburg, KS                      |  | ABC         |  | SSA               |  | 3/31/12    |  | $75 thousand per month paid to Nexstar                                            
|               |  |                                               |  |             |  | JSA               |  | 9/30/14    |  | 70% of the KODE net revenue collected each month received from Nexstar            
|               |  |                                               |  |             | 
|KRBC           |  | Abilene-Sweetwater, TX                        |  | NBC         |  | SSA               |  | 6/12/13    |  | $25 thousand per month paid to Nexstar                                            
|               |  |                                               |  |             |  | JSA               |  | 6/30/14    |  | 70% of the KRBC net revenue collected each month received from Nexstar            
|               |  |                                               |  |             | 
|KSAN           |  | San Angelo, TX                                |  | NBC         |  | SSA               |  | 5/31/14    |  | $10 thousand per month paid to Nexstar                                            
|               |  |                                               |  |             |  | JSA               |  | 5/31/14    |  | 70% of the KSAN net revenue collected each month received from Nexstar            
|               |  |                                               |  |             | 
|WFXW           |  | Terre Haute, IN                               |  | Fox         |  | SSA               |  | 5/8/13     |  | $10 thousand per month paid to Nexstar                                            
|               |  |                                               |  |             |  | JSA               |  | 5/8/13     |  | 70% of the WFXW net revenue collected each month received from Nexstar            
|               |  |                                               |  |             | 
|KCIT and       |  | Amarillo, TX                                  |  | Fox         |  | SSA               |  | 4/30/09    |  | $50 thousand per month paid to Nexstar                                            
|KCPN-LP        |  |                                               |  | MyNetworkTV |  | JSA               |  | 4/30/09    |  | 70% of the KCIT/KCPN-LP net revenue collected each month received from Nexstar    
|               |  |                                               |  |             | 
|KHMT           |  | Billings, MT                                  |  | Fox         |  | TBA               |  | 12/13/09   |  | Monthly payments received from Nexstar(1)                                         
|               |  |                                               |  |             | 
|KAMC           |  | Lubbock, TX                                   |  | ABC         |  | SSA               |  | 2/15/09    |  | $75 thousand per month paid to Nexstar                                            
|               |  |                                               |  |             |  | JSA               |  | 2/15/09    |  | 70% of the KAMC net revenue collected each month received from Nexstar            
|               |  |                                               |  |             | 
|KOLR           |  | Springfield, MO                               |  | CBS         |  | SSA               |  | 2/15/09    |  | $150 thousand per month paid to Nexstar                                           
|               |  |                                               |  |             |  | JSA               |  | 2/15/09    |  | 70% of the KOLR net revenue collected each month received from Nexstar            
|               |  |                                               |  |             | 
|WUTR           |  | Utica, NY                                     |  | ABC         |  | SSA               |  | 3/31/14    |  | $10 thousand per month paid to Nexstar                                            
|               |  |                                               |  |             |  | JSA               |  | 3/31/14    |  | 70% of the WUTR net revenue collected each month received from Nexstar            
|               |  |                                               |  |             | 
|WTVO           |  | Rockford, IL                                  |  | ABC         |  | SSA               |  | 10/31/14   |  | $75 thousand per month paid to Nexstar                                            
|               |  |                                               |  |             |  | JSA               |  | 10/31/14   |  | 70% of the WTVO net revenue collected each month received from Nexstar            
|               |  |                                               |  |             | 
|Nexstar-owned: |  |                                               |  |             |  |                   |  |            |  |                                                                                   
|               |  |                                               |  |             | 
|KFTA           |  | Ft. Smith-Fayetteville- Springdale-Rogers,
AR |  | Fox/NBC     |  | TBA               |  | (2)        |  | $5 thousand per month paid to Nexstar $20 thousand per
month received from Nexstar

---

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

|(2) | TBA will terminate upon the assignment of KFTAs FCC license from Nexstar.
|--- | --------------------------------------------------------------------------



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)



3. Local Service Agreements with Nexstar(Continued)



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

4. Pending Transaction
with Nexstar

On April 11, 2006, Nexstar and Mission filed an application with the FCC for consent to assignment of the license
for KFTA Channel 24 (Ft. Smith, Arkansas) from Nexstar to Mission. Consideration for this transaction is set at $5.6 million. On August 28, 2006, Mission and Nexstar entered into a local service agreement (see Note 3) whereby Mission pays
Nexstar for the right to broadcast programming on KFTA and Nexstar pays Mission for the right to sell all advertising time on KFTA within certain time periods. Also in 2006, Mission entered into an affiliation agreement with the Fox network which
provides Fox programming to KFTA. Upon completing the assignment of KFTAs license, the Company plans to enter into JSA and SSA agreements with Nexstar-owned KNWA in Fort Smith-Fayetteville-Springdale-Rogers, Arkansas, whereby KNWA will provide
local news, sales and other non-programming services to KFTA.

In May 2006, two affiliates of Equity Broadcasting Corporation
(Equity) filed a petition to deny against the KFTA assignment application alleging that Nexstar improperly controls Mission and its stations. Nexstar and Mission submitted a joint opposition to Equitys petition to deny. The FCC is
currently considering the KFTA assignment application. In September 2006, Equity also submitted a petition to deny Nexstars application for the renewal of KFTAs FCC license. Nexstar has filed its response to Equitys petition to
deny the license renewal. Although management believes that the petitions have no merit, it is not possible to predict what action the FCC will take on the petitions to deny, or when it will take such action.

5. Pending Acquisition

On June 27, 2007,
Mission entered into a purchase agreement to acquire substantially all the assets of KTVE, the NBC affiliate serving the Monroe, Louisiana / El Dorado, Arkansas market, for $7.7 million in cash from Piedmont Television Holdings LLC. Pursuant to the
terms of the agreement, Mission made a down payment of $0.4 million against the purchase price in June 2007. Mission intends to finance the acquisition through borrowings under its senior secured credit facility. The acquisition is expected to close
in the fourth quarter of 2007, subject to FCC consent. Upon closing the purchase of KTVE, Mission will enter into a JSA and SSA with Nexstar-owned KARD, the Fox affiliate in the market, whereby KARD will provide local news, sales and other
non-programming services to KTVE.

6. Intangible Assets and Goodwill

Intangible assets subject to amortization consisted of the following:



|                                                |  |                               |       |                    |                          |                   |   |         |   |       |   |                          |  |   |        |  |   |         |   |  |   |       
|----------------------------------------------- |  | ----------------------------- | ----- | ------------------ | ------------------------ | ----------------- | - | ------- | - | ----- | - | ------------------------ |  | - | ------ |  | - | ------- | - |  | - | ------
|                                                |  | Estimated useful life (years) |       | September 30, 2007 |                          | December 31, 2006
|                                                |  |                               | Gross |                    | Accumulated Amortization |                   |   | Net     |   | Gross |   | Accumulated Amortization |  |   | Net   
|                                                |  |                               |       | (in thousands)     |                          | (in thousands)   
|Network affiliation agreements                  |  | 15                            |       | $                  | 66,744                   |                   | $ | (34,444 | ) |       | $ | 32,300                   |  | $ | 66,744 |  | $ | (31,106 | ) |  | $ | 35,638
|Other definite-lived intangible assets          |  | 1-15                          |       |                    | 13,117                   |                   |   | (7,717  | ) |       |   | 5,400                    |  |   | 14,117 |  |   | (7,554  | ) |  |   | 6,563 
|                                                |  |                               |       |                    |                          |                   |   |         |   |       |   |                          |  |   |        |  |   |         |   |  |   |       
|Total intangible assets subject to amortization |  |                               |       | $                  | 79,861                   |                   | $ | (42,161 | ) |       | $ | 37,700                   |  | $ | 80,861 |  | $ | (38,660 | ) |  | $ | 42,201
|                                                |  |                               |       |                    |                          |                   |   |         |   |       |   |                          |  |   |        |  |   |         |   |  |   |       

Total amortization expense from definite-lived intangibles was $1.3 million for both the three
months ended September 30, 2007 and 2006, and was $4.0 million for both the nine months ended September 30 2007 and 2006. The Companys estimate of amortization expense for definite-lived intangible assets recorded on its books as of
September 30, 2007 is approximately $5 million for each year for the years of 2007 through 2011.

The aggregate carrying value of
indefinite-lived intangibles, consisting of FCC licenses and goodwill, was $45.9 million and $45.4 million at September 30, 2007 and December 31, 2006, respectively. Indefinite-lived intangible assets are not subject to amortization, but
are tested for impairment annually or whenever events or changes in circumstances indicate that such assets might be impaired. As of September 30, 2007, the Company did not identify any events that would trigger an impairment assessment.



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)



6. Intangible Assets and Goodwill(Continued)



The change in carrying amount of goodwill for the nine months ended September 30, 2007 was as
follows:



|                             |  |                   |       
|---------------------------- |  | ----------------- | ------
|                             |  | September 30,2007
|                             |  | (in thousands)   
|Beginning balance            |  | $                 | 16,651
|Reclassification of an asset |  |                   | 471   
|                             |  |                   |       
|Ending balance               |  | $                 | 17,122
|                             |  |                   |       

The Company reclassified certain amounts representing goodwill that were improperly classified as
other intangible assets.

7. Debt

Long-term debt consisted of the following:



|                      |  |                   |         |   |                  |   |         |  
|--------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                      |  | September 30,2007 |         |   | December 31,2006 |  
|                      |  | (in thousands)    |        
|Term loans            |  | $                 | 169,246 |   |                  | $ | 170,541 |  
|Less: current portion |  |                   | (1,727  | ) |                  |   | (1,727  | )
|                      |  |                   |         |   |                  |   |         |  
|                      |  | $                 | 167,519 |   |                  | $ | 168,814 |  
|                      |  |                   |         |   |                  |   |         |  

Senior Secured Credit Facility

The Mission senior secured credit facility (the Mission Facility) consists of a Term Loan B and a $15.0 million revolving loan. As of
September 30, 2007 and December 31, 2006, Mission had $169.2 million and $170.5 million, respectively, outstanding under its Term Loan B and no borrowings were outstanding under its revolving loan.

The Term Loan B, which matures in October 2012, is payable in consecutive quarterly installments amortized at 0.25% quarterly, with the remaining 93.25%
due at maturity. During the nine months ended September 30, 2007 repayments of Missions Term Loan B totaled $1.3 million, all of which were scheduled maturities. The revolving loan is not subject to incremental reduction and matures in
April 2012.

The total weighted-average interest rate of the Mission Facility was 6.95% at both September 30, 2007 and
December 31, 2006. Interest is payable periodically based on the type of interest rate selected. Additionally, Mission is required to pay quarterly commitment fees on the unused portion of its revolving loan commitment ranging from 0.375% to
0.50% per annum, based on the consolidated senior leverage ratio of Nexstar and Mission for that particular quarter.

Unused
Commitments and Borrowing Availability

As of September 30, 2007, there were $15.0 million of unused commitments under
Missions credit facility. The total amount of borrowings available under the revolving loan commitment of Missions senior secured credit facility is based on covenant calculations contained in Nexstars credit agreement. As of
September 30, 2007, all $15.0 million of total unused commitments under the Mission credit facility were available for borrowing.

Collateralization and Guarantees of Debt

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

Debt Covenants

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



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)



8. Gain on Asset Exchange

In 2004, the FCC approved a spectrum allocation exchange between Sprint Nextel Corporation (Nextel) and public safety entities to eliminate interference being caused to public safety radio licensees by
Nextels operations. As part of this spectrum exchange, the FCC granted Nextel the right to certain spectrum within the 1.9 GHz band that is currently used by television broadcasters. In order to utilize this spectrum, Nextel is required to
relocate the broadcasters to new spectrum by replacing all analog equipment currently used by broadcasters with comparable digital equipment. The Company has agreed to accept the substitute equipment that Nextel will provide and in turn must
relinquish its existing equipment back to Nextel. This transition began on a market by market basis beginning in the third quarter of 2007. The equipment the Company receives under this arrangement is recorded at their estimated fair market value
and depreciated over estimated useful lives ranging from 5 to 15 years. Managements determination of the fair market value is derived from quoted prices obtained from manufacturers and vendors for the specific equipment acquired. As equipment
is exchanged, the Company records a gain to the extent that the fair market value of the equipment received exceeds the carrying amount of the equipment relinquished. For the three and nine months ended September 30, 2007, the Company
recognized a gain of $0.3 million from the exchange of this equipment.

9. Income Taxes

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

On June 15, 2007, the Texas Governor signed legislation that provided various technical corrections to the Texas Margin Tax. Based on the changes
provided in this newly enacted tax law, the Company adjusted its temporary credit for Texas business loss carryovers to be used as an offset to the Margin Tax and a related deferred tax asset during the second quarter of 2007. The effect of the
revision made to the temporary credit increased the Companys deferred tax assets position resulting in approximately a $0.3 million reduction in the deferred state income tax provision for the nine months ended September 30, 2007.

At January 1, 2007, the Company had gross unrecognized tax benefits of approximately $4.1 million, which did not materially change as
of September 30, 2007. The Company has not accrued interest on the unrecognized tax benefits as an unfavorable outcome upon examination would not result in a cash outlay, but would reduce NOLs subject to a valuation allowance. Due to the
existence of a valuation allowance, their reversal will have no effect on the Companys effective tax rate or financial position.

The
Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company is subject to U.S. federal tax examinations for years after 2003. Additionally, any NOLs that were generated in prior years and that are
utilized in the future may be subject to examination by the Internal Revenue Service. State jurisdictions that remain subject to examination are not considered significant.

10. FCC Regulatory Matters

Television broadcasting is subject to the jurisdiction of the FCC
under the Communications Act of 1934, as amended (the Communications Act). The Communications Act prohibits the operation of television broadcasting stations except under a license issued by the FCC, and empowers the FCC, among other
things, to issue, revoke, and modify broadcasting licenses, determine the location of television stations, regulate the equipment used by television stations, adopt regulations to carry out the provisions of the Communications Act and impose
penalties for the violation of such regulations. The FCCs ongoing rule making proceedings could have a significant future impact on the television industry and on the operation of the Companys stations. In addition, the U.S. Congress may
act to amend the Communications Act in a manner that could impact the Companys stations and the television broadcast industry in general.

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



10



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)



10. FCC Regulatory Matters(Continued)



Digital Television (DTV) Conversion

Television broadcasting in the United States is moving from an analog transmission system to a digital transmission system. For the transition period,
the FCC allotted each licensed television station a second channel for broadcast of a DTV signal. In 2006, President Bush signed into law legislation that establishes February 17, 2009 as the deadline for television broadcasters to broadcast on
a single DTV channel and return their analog channel to the FCC. Prior to February 17, 2009, television stations must broadcast with both analog and DTV signals.

Except for stations which have requested waiver of the FCCs deadline for construction, broadcast television stations are required to be broadcasting a full-power DTV signal. As of September 30, 2007,
Missions stations KOLR, WUTR, WTVO, WYOU and KRBC are broadcasting with full-power DTV signals. The FCC has authorized Mission to operate DTV facilities for its remaining stations at low-power until November 18, 2007. Requests to extend
the authority to broadcast low-power DTV signals for Missions remaining stations will be filed with the FCC before November 18, 2007. Under the FCCs rules, these stations will be allowed to continue to operate at low-power until
action is taken on the extension requests. If the FCC denies this further request for extension of time, the stations may lose interference protection for their signals outside their low-power coverage area.

DTV conversion expenditures were $1.4 million and $1.0 million, respectively, for the nine months ended September 30, 2007 and 2006. The Company
will incur various capital expenditures to modify its remaining stations DTV transmitting equipment for full-power DTV operations, including costs for the transmitter, transmission line, antenna and installation, and estimated costs for tower
upgrades and/or modifications. The Company anticipates these expenditures will be funded through available cash on hand and cash generated from operations as incurred in future years.

Media Ownership

In
2006, the FCC initiated a rulemaking proceeding which provides for a comprehensive review of all of its media ownership rules, as required by the Communications Act. The Commission is considering rules relating to ownership of two or more TV
stations in a market, ownership of local TV and radio stations by daily newspapers in the same market, cross-ownership of local TV and radio stations, and changes to how the national TV ownership limits are calculated. The proceeding, which includes
several public hearings to be held throughout the country, has extended into 2007. At this time, it is not possible to predict the outcome of any changes, if any, to the FCCs media ownership rules.

11. Commitments and Contingencies

Guarantees
of Nexstar Debt

Mission is a guarantor of and has pledged substantially all its assets, excluding FCC licenses, to guarantee
Nexstars bank credit facility. Nexstars bank credit facility, which matures in 2012, consists of a Term Loan B and a $82.5 million revolving loan.

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

Mission guarantees full payment of all obligations incurred under Nexstars bank credit facility
agreement and senior subordinated notes. In the event that Nexstar is unable to repay amounts due under these debt obligations, Mission will be obligated to repay such amounts. The maximum potential amount of future payments that Mission would be
required to make under these guarantees would be generally limited to the amount of borrowings outstanding under Nexstars bank credit facility and the 7% Notes. At September 30, 2007, Nexstar had issued an aggregate principal amount of
$200.0 million of senior subordinated notes and had $189.3 million outstanding under its bank credit facility.

Purchase Options
Granted to Nexstar

In consideration of Nexstar Broadcasting Groups guarantee of Missions bank credit facility,
Missions sole shareholder has granted Nexstar purchase options to acquire the assets and assume the liabilities of each Mission station, subject to FCC consent, for consideration equal to the greater of (1) seven times the stations
cash flow, as defined in the option agreement, less the amount of its indebtedness as defined in the option agreement, or (2) the amount of its indebtedness. Cash flow is defined as income or loss from operations, plus depreciation and
amortization (including amortization of broadcast rights), interest income, non-cash trade and barter expenses, nonrecurring expenses (including time brokerage agreement fees), network compensation payments received or receivable and



11



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)



11. Commitments and Contingencies(Continued)



corporate management fees, less payments for broadcast rights, non-cash trade and barter revenue and network compensation revenue. These option agreements
(which expire on various dates between 2008 and 2014) are freely exercisable or assignable by Nexstar without consent or approval by Missions sole shareholder.

Indemnification Obligations

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

Litigation

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



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

The following discussion and analysis should be read in conjunction with the unaudited condensed balance sheet as of September 30, 2007, unaudited condensed statements of operations for the three and nine months ended
September 30, 2007 and 2006, unaudited condensed statement of changes in shareholders deficit for the nine months ended September 30, 2007, unaudited condensed statements of cash flows for the nine months ended September 30,
2007 and 2006 and related notes included elsewhere in this Quarterly Report on Form 10-Q and the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2006.

Executive Summary

Overview of Operations

As of September 30, 2007, we owned and operated 15 television stations. We have local service agreements with certain
television stations of Nexstar Broadcasting, Inc. (Nexstar), through which Nexstar provides various programming, sales or other services to our television stations. In order for both Nexstar and us to comply with Federal Communications
Commission (FCC) regulations, we maintain complete responsibility for and control over programming, finances, personnel and operations of our stations.

The following table summarizes the various local service agreements our stations had in effect as of September 30, 2007 with Nexstar:



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

---

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



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

The arrangements under the local service agreements each Mission station has entered into with Nexstar has had the
effect of Nexstar receiving substantially all of the available cash, after our payments of operating costs and debt service, generated by our stations. We anticipate that Nexstar will continue to receive substantially all of our available cash,
after our payments for operating costs and debt service, generated by our stations. For more information about our local service agreements with Nexstar, refer to Note 3 of our condensed financial statements in Part I, Item 1 of this Quarterly
Report on Form 10-Q.

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

Recent Developments

On May 17, 2007, Nexstar Broadcasting Group, Inc. announced that its Board of Directors decided to engage Goldman, Sachs & Co. to assist it
in reviewing strategic alternatives including, but not limited to, the sale of Nexstar. On August 3, 2007, in light of the difficult conditions in the financing markets, Nexstar Broadcasting Group, Inc.s Board of Directors, in
consultation with its financial advisor Goldman, Sachs & Co., decided to suspend discussions with prospective acquirers of Nexstar. At this time, it is not possible to determine what, if any, impact this may have on Mission.

On June 27, 2007, we entered into a purchase agreement to acquire substantially all the assets of KTVE, the NBC affiliate serving the Monroe,
Louisiana / El Dorado, Arkansas market, for $7.7 million in cash from Piedmont Television Holdings LLC. Pursuant to the terms of the agreement, we made a down payment of $0.4 million against the purchase price in June 2007. We intend to finance the
acquisition through borrowings under our senior secured credit facility. The acquisition is expected to close in the fourth quarter of 2007, subject to FCC consent. Upon closing the purchase of KTVE, we will enter into a JSA and SSA with
Nexstar-owned KARD, the Fox affiliate in the market, whereby KARD will provide local news, sales and other non-programming services to KTVE.

On April 11, 2006, we and Nexstar filed an application with the FCC for consent to assignment of the license for KFTA Channel 24 (Ft. Smith, Arkansas) from Nexstar to us. Consideration for this transaction is set at $5.6 million. Also
in 2006, we entered into an affiliation agreement with the Fox network which provides Fox programming to KFTA. On August 28, 2006, we and Nexstar entered into a local service agreement whereby we pay Nexstar for the right to broadcast
programming on KFTA and Nexstar pays us for the right to sell all advertising time within certain time periods. The time brokerage agreement will terminate upon the assignment of KFTAs FCC license from Nexstar to us. Upon completing the
assignment of KFTAs license, we plan to enter into joint sales and



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shared services agreements with Nexstar-owned KNWA in Fort Smith-Fayetteville-Springdale-Rogers, Arkansas, whereby KNWA will provide local news, sales and
other non-programming services to KFTA.

In May 2006, two affiliates of Equity Broadcasting Corporation (Equity) filed a
petition to deny against the KFTA assignment application alleging that Nexstar improperly controls us and our stations. We and Nexstar have submitted a joint opposition to Equitys petition to deny. The FCC is currently considering the KFTA
assignment application. In September 2006, Equity also submitted a petition to deny Nexstars application for the renewal of KFTAs FCC license. Nexstar has filed its response to Equitys petition to deny the license renewal. Although
management believes that the petitions have no merit, it is not possible to predict what action the FCC will take on the petitions to deny, or when it will take such action.

Historical Performance

Revenue

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



|                                        |  |                                    |       |                                    |       |        |   |       |  |        |  |   |        |        |       |   |   |        |  |      
|--------------------------------------- |  | ---------------------------------- | ----- | ---------------------------------- | ----- | ------ | - | ----- |  | ------ |  | - | ------ | ------ | ----- | - | - | ------ |  | -----
|                                        |  | Three Months Ended September 30,   |       | Nine Months Ended September 30,   
|                                        |  | 2007                               |       | 2006                               |       | 2007   |   | 2006 
|                                        |  | Amount                             |       | %                                  |       | Amount |   | %     |  | Amount |  | % |        | Amount |       | %
|                                        |  | (in thousands, except percentages) |       | (in thousands, except percentages)
|Retransmission compensation             |  | $                                  | 622   |                                    | 56.9  |        | $ | 492   |  | 55.9   |  | $ | 1,806  |        | 54.7  |   | $ | 1,455  |  | 55.6 
|Network compensation                    |  |                                    | 448   |                                    | 41.0  |        |   | 355   |  | 40.3   |  |   | 1,397  |        | 42.3  |   |   | 1,070  |  | 40.9 
|Other                                   |  |                                    | 23    |                                    | 2.1   |        |   | 33    |  | 3.8    |  |   | 97     |        | 3.0   |   |   | 92     |  | 3.5  
|                                        |  |                                    |       |                                    |       |        |   |       |  |        |  |   |        |        |       |   |   |        |  |      
|Net broadcast revenue before barter     |  |                                    | 1,093 |                                    | 100.0 |        |   | 880   |  | 100.0  |  |   | 3,300  |        | 100.0 |   |   | 2,617  |  | 100.0
|Barter revenue                          |  |                                    | 586   |                                    |       |        |   | 524   |  |        |  |   | 1,705  |        |       |   |   | 1,535  |  |      
|Revenue from Nexstar Broadcasting, Inc. |  |                                    | 7,206 |                                    |       |        |   | 7,836 |  |        |  |   | 22,352 |        |       |   |   | 22,620 |  |      
|                                        |  |                                    |       |                                    |       |        |   |       |  |        |  |   |        |        |       |   |   |        |  |      
|Net revenue                             |  | $                                  | 8,885 |                                    |       |        | $ | 9,240 |  |        |  | $ | 27,357 |        |       |   | $ | 26,772 |  |      
|                                        |  |                                    |       |                                    |       |        |   |       |  |        |  |   |        |        |       |   |   |        |  |      

Results of Operations

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



|                                                                                   |  |                                    |       |                                    |      |       |      |        |   |       |  |        |  |   |        |   |  |        |   |   |   |        |  |       |  | 
|---------------------------------------------------------------------------------- |  | ---------------------------------- | ----- | ---------------------------------- | ---- | ----- | ---- | ------ | - | ----- |  | ------ |  | - | ------ | - |  | ------ | - | - | - | ------ |  | ----- |  | 
|                                                                                   |  | Three Months Ended September 30,   |       | Nine Months Ended September 30,   
|                                                                                   |  | 2007                               |       |                                    | 2006 |       | 2007 |        |   | 2006 
|                                                                                   |  | Amount                             |       |                                    | %    |       |      | Amount |   | %     |  | Amount |  |   | %      |   |  | Amount |   | %
|                                                                                   |  | (in thousands, except percentages) |       | (in thousands, except percentages)
|Net revenue                                                                        |  | $                                  | 8,885 |                                    |      | 100.0 |      |        | $ | 9,240 |  | 100.0  |  | $ | 27,357 |   |  | 100.0  |   |   | $ | 26,772 |  | 100.0
|Operating expenses (income):                                                       |  |                                    |       |                                    |      |       |      |        |   |       |  |        |  |   |        |   |  |        |   |   |   |        |  |      
|Corporate expenses                                                                 |  |                                    | 176   |                                    |      | 2.0   |      |        |   | 203   |  | 2.2    |  |   | 660    |   |  | 2.4    |   |   |   | 605    |  | 2.3  
|Station direct operating expenses, net of trade                                    |  |                                    | 1,292 |                                    |      | 14.5  |      |        |   | 1,189 |  | 12.9   |  |   | 3,808  |   |  | 13.9   |   |   |   | 3,493  |  | 13.0 
|Selling, general and administrative expenses                                       |  |                                    | 376   |                                    |      | 4.2   |      |        |   | 423   |  | 4.6    |  |   | 1,055  |   |  | 3.9    |   |   |   | 1,111  |  | 4.1  
|Fees incurred pursuant to local service agreements with Nexstar Broadcasting, Inc. |  |                                    | 1,965 |                                    |      | 22.1  |      |        |   | 1,955 |  | 21.2   |  |   | 5,895  |   |  | 21.5   |   |   |   | 5,855  |  | 21.9 
|Gain on asset exchange                                                             |  |                                    | (317  | )                                  |      | (3.6  | )    |        |   |      |  |       |  |   | (317   | ) |  | (1.2   | ) |   |   |       |  |     
|Loss (gain) on asset disposal, net                                                 |  |                                    | (1    | )                                  |      |      |      |        |   |      |  |       |  |   | 4      |   |  |       |   |   |   | 7      |  |     
|Barter expense                                                                     |  |                                    | 586   |                                    |      | 6.6   |      |        |   | 524   |  | 5.7    |  |   | 1,705  |   |  | 6.2    |   |   |   | 1,535  |  | 5.7  
|Depreciation and amortization                                                      |  |                                    | 2,139 |                                    |      | 24.1  |      |        |   | 2,167 |  | 23.5   |  |   | 6,500  |   |  | 23.8   |   |   |   | 6,519  |  | 24.4 
|Amortization of broadcast rights, excluding barter                                 |  |                                    | 691   |                                    |      | 7.8   |      |        |   | 592   |  | 6.4    |  |   | 1,455  |   |  | 5.3    |   |   |   | 1,394  |  | 5.2  
|                                                                                   |  |                                    |       |                                    |      |       |      |        |   |       |  |        |  |   |        |   |  |        |   |   |   |        |  |       |  | 
|Income from operations                                                             |  | $                                  | 1,978 |                                    |      |       |      |        | $ | 2,187 |  |        |  | $ | 6,592  |   |  |        |   |   | $ | 6,253  |  |      
|                                                                                   |  |                                    |       |                                    |      |       |      |        |   |       |  |        |  |   |        |   |  |        |   |   |   |        |  |       |  | 

Three Months Ended September 30, 2007 Compared to Three Months Ended September 30, 2006.

Revenue

Net
revenue for the three months ended September 30, 2007, decreased by $0.4 million, or 3.8% from the same period of 2006. This decrease was primarily attributed to the decrease in revenue from Nexstar discussed below.



Revenue from Nexstar was $7.2 million for the three months ended
September 30, 2007, compared to $7.8 million for the same period in 2006, a decrease of $0.6 million, or 8.0%. The decrease was primarily attributed to a decrease in the political revenue that Nexstar generated from selling all of the
advertising of our stations, which in turn decreased the revenue we earned from Nexstar through JSAs.



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Compensation from retransmission consent and network affiliation agreements was $1.1 million for the
three months ended September 30, 2007, compared to $0.8 million for the same period in 2006, an increase of $0.3 million, or 26.3%. The increase was primarily due to an increase in the compensation we receive under retransmission consent
agreements which primarily resulted from increases in the number cable and satellite subscribers in our markets.

Operating Expenses

Corporate expenses, related to costs associated with the centralized management of our stations, decreased by $27 thousand, or
13.3%, for the three months ended September 30, 2007 compared to same period in 2006.

Station direct operating expenses, consisting
primarily of news, engineering and programming, and selling, general and administrative expenses increased by $0.1 million, or 3.5% for the three months ended September 30, 2007, compared to the same period in 2006. The increase was primarily
due to an increases in network affiliate related fees.

Local service agreement fees associated with Nexstar relate to services provided by
Nexstar in the production of newscasts, technical maintenance, promotional and administrative support under the SSAs. SSA fees increased by $10 thousand, or 0.5%, for the three months ended September 30, 2007 compared to the same period in
2006. These fees increased in 2007 due to the TBA entered into with Nexstar-owned KFTA that did not commence until the third quarter of 2006.

Amortization of broadcast rights, excluding barter, increased by $0.1 million, or 16.7%, for the three months ended September 30, 2007, compared to the same period in 2006.

Amortization of intangible assets was $1.3 million for both the three months ended September 30, 2007 and 2006.

Depreciation of property and equipment was $0.8 million for both the three months ended September 30, 2007 and 2006.

For the three months ended September 30, 2007, we recognized a gain of $0.3 million from the exchange of equipment under an arrangement we first
transacted with Sprint Nextel Corporation in the third quarter of 2007.

Income from Operations

Income from operations was $2.0 million for the three months ended September 30, 2007, compared to $2.2 million for the same period of 2006, a
decrease of $0.2 million, or 9.6%. The decrease in income from operations for the three months ended September 30, 2007 was primarily attributed to the decrease in total net revenue, partially offset by the gain on asset exchange, as discussed
above.

Interest Expense

Interest expense, including amortization of debt financing costs, decreased by $0.2 million, or 4.6%, for the three months ended September 30, 2007, compared to the same period in 2006. The lower amount of interest expense was
primarily attributed to lower interest rates incurred during the three months ended September 30, 2007 compared to the same period in 2006 and continual reductions in the amount outstanding under our Term Loan B during the second half of
2006 and in 2007 under our senior credit facility.

Income Taxes

Income tax expense increased by $24 thousand for the three months ended September 30, 2007, compared to the same period in 2006. The increase was
primarily due to a provision for current state income tax of $16 thousand in the third quarter of 2007 related to the Texas Margin Tax. Our provision for income taxes is primarily created by an increase in the deferred tax liabilities position
during the year arising from the amortizing of goodwill and other indefinite-lived intangible assets for income tax purposes which are not amortized for financial reporting purposes. This expense has no impact on our cash flows. Based primarily on
our recent history of net operating losses, we do not consider the realization of our net deferred tax assets to be more likely than not. Accordingly, we have provided a full valuation allowance for net deferred tax assets excluding deferred tax
liabilities attributable to goodwill and indefinite-lived intangible assets. No tax benefit was recorded with respect to the losses for 2007 and 2006, as the utilization of such losses is not likely to be realized in the foreseeable future.

Nine Months Ended September 30, 2007 Compared to Nine Months Ended September 30, 2006.

Revenue

Net revenue for the
nine months ended September 30, 2007, increased by $0.6 million, or 2.2% from the same period of 2006. This increase was primarily attributed to the increases in revenue from retransmission compensation and network compensation discussed below.



Revenue from Nexstar was $22.4 million for the nine months ended
September 30, 2007, compared to $22.6 million for the same period in 2006, a decrease of $0.2 million, or 1.2%. The decrease was primarily attributed to a decrease in the political revenue that



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Nexstar generated from selling all of the advertising of our stations, which in turn decreased the revenue we earned from Nexstar through the JSAs.

Compensation from retransmission consent and network affiliation agreements was $3.2 million for the nine months ended September 30,
2007, compared to $2.5 million for the same period in 2006, an increase of $0.7 million, or 28.2%. The increase was primarily due to an increase in the compensation we receive under retransmission consent agreements which primarily resulted from
increases in the number cable and satellite subscribers in our markets.

Operating Expenses

Corporate expenses, related to costs associated with the centralized management of our stations, increased by $0.1 million, or 9.1% for the nine months
ended September 30, 2007, compared to the same period in 2006. The increase was primarily attributed to higher compensation costs incurred in 2007 compared to 2006.

Station direct operating expenses, consisting primarily of news, engineering and programming, and selling, general and administrative expenses increased by $0.3 million, or 5.6% for the nine months ended
September 30, 2007, compared to the same period in 2006. The increase was primarily due to an increases in network affiliate related fees.

Local service agreement fees associated with Nexstar relate to services provided by Nexstar in the production of newscasts, technical maintenance, promotional and administrative support under the SSAs. SSA fees increased by $40 thousand, or
0.7%, for the nine months ended September 30, 2007 compared to the same period in 2006. These fees increased in 2007 due to the TBA entered into with Nexstar-owned KFTA that did not commence until the third quarter of 2006.

Amortization of broadcast rights, excluding barter, increased by $0.1 million, or 4.4%, for the nine months ended September 30, 2007, compared to
the same period in 2006.

Amortization of intangible assets was $4.0 million for both the nine months ended September 30, 2007 and
2006.

Depreciation of property and equipment was $2.5 million for both the nine months ended September 30, 2007 and 2006.

For the nine months ended September 30, 2007, we recognized a gain of $0.3 million from the exchange of equipment under an arrangement we first
transacted with Sprint Nextel Corporation in the third quarter of 2007.

Income from Operations

Income from operations was $6.6 million for the nine months ended September 30, 2007, compared to $6.3 million for the same period of 2006, an
increase of $0.3 million, or 5.4%. The increase in income from operations for the nine months ended September 30, 2007 was primarily attributed to the increase in total net revenue and gain on asset exchange, partially offset by increases in
certain operating costs, as discussed above.

Interest Expense

Interest expense, including amortization of debt financing costs, increased by $0.2 million, or 2.0%, for the nine months ended September 30, 2007,
compared to the same period in 2006. The increase in interest expense was primarily attributed to higher interest rates incurred during the nine months ended September 30, 2007 compared to the same period in 2006, partially offset by a
reduction in the amount outstanding under our senior credit facility during 2007.

Income Taxes

Income taxes were $0.8 million for the nine months ended September 30, 2007, compared to $0.9 million for the same
period in 2006. The decrease in income taxes was primarily due to a $0.3 million reduction in our deferred state income tax provision for the nine months ended September 30, 2007 resulting from the enactment of recent legislation revising the
Texas Margin Tax and its computation of the temporary credit for Texas business loss carryovers. The decrease was partially offset by a provision for current state income tax of $0.1 million for the nine months ended September 30, 2007 related
to the Texas Margin Tax. Our provision for income taxes is primarily created by an increase in the deferred tax liabilities position during the year arising from the amortizing of goodwill and other indefinite-lived intangible assets for income tax
purposes which are not amortized for financial reporting purposes. This expense has no impact on our cash flows. Based primarily on our recent history of net operating losses, we do not consider the realization of our net deferred tax assets to be
more likely than not. Accordingly, we have provided a full valuation allowance for net deferred tax assets excluding deferred tax liabilities attributable to goodwill and indefinite-lived intangible assets. No tax benefit was recorded with respect
to the losses for 2007 and 2006, as the utilization of such losses is not likely to be realized in the foreseeable future.



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Liquidity and Capital Resources

We are highly leveraged, which makes us vulnerable to changes in general economic conditions. Our ability to meet the future cash requirements described below depends on our ability to generate cash in the future,
which is subject to general economic, financial, competitive, legislative, regulatory and other conditions, many of which are beyond our control. Our ability to meet future cash requirements is also dependent upon the local service agreements we
have entered into with Nexstar. Under our local service agreements, Nexstar sells our advertising time and pays us a percentage of the amount collected. The payments we receive from Nexstar are a significant component of our cash flows. On
March 9, 2007, Nexstar represented to us that it will continue the various local service agreements under which it provides sales and other services to our television stations thereby providing financial support to enable us to continue to
operate as a going concern. We believe that with Nexstars pledge to continue the local service agreements, our available cash, anticipated cash flow from operations and available borrowings under our senior credit facility should be sufficient
to fund working capital, capital expenditure requirements, interest payments and scheduled debt principal payments for at least the next twelve months from December 31 2006. In order to meet future cash needs we may, from time to time, borrow
under our available credit facility. We will continue to evaluate the best use of our operating cash flow among capital expenditures, acquisitions and debt reduction.

On May 17, 2007, Nexstar Broadcasting Group, Inc. announced that its Board of Directors decided to engage Goldman, Sachs & Co. to assist it in reviewing strategic alternatives including, but not limited
to the sale of Nexstar. On August 3, 2007, in light of the difficult conditions in the financing markets, Nexstar Broadcasting Group, Inc.s Board of Directors, in consultation with its financial advisor Goldman, Sachs & Co.,
decided to suspend discussions with prospective acquirers of Nexstar. At this time it is not possible to determine what, if any, impact this may have on Mission.

Overview

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



|                                                   |  |                                 |         |   |                   |   |         |  
|-------------------------------------------------- |  | ------------------------------- | ------- | - | ----------------- | - | ------- | -
|                                                   |  | Nine Months Ended September 30, |        
|                                                   |  | 2007                            |         |   | 2006              |  
|                                                   |  | (in thousands)                  |        
|Net cash provided by operating activities          |  | $                               | 2,038   |   |                   | $ | 2,065   |  
|Net cash used for investing activities             |  |                                 | (1,789  | ) |                   |   | (1,191  | )
|Net cash used for financing activities             |  |                                 | (1,295  | ) |                   |   | (1,295  | )
|                                                   |  |                                 |         |   |                   |   |         |  
|Net decrease in cash and cash equivalents          |  | $                               | (1,046  | ) |                   | $ | (421    | )
|                                                   |  |                                 |         |   |                   |   |         |  
|Cash paid for interest                             |  | $                               | 9,280   |   |                   | $ | 9,051   |  
|Cash paid for income taxes, net                    |  | $                               |        |   |                   | $ |        |  
|                                                   |  |                                
|                                                   |  | September 30, 2007              |         |   | December 31, 2006 |  
|                                                   |  | (in thousands)                  |        
|Cash and cash equivalents                          |  | $                               | 2,531   |   |                   | $ | 3,577   |  
|Long-term debt including current portion           |  | $                               | 169,246 |   |                   | $ | 170,541 |  
|Unused commitments under senior credit facility(1) |  | $                               | 15,000  |   |                   | $ | 15,000  |  

---

|(1) | As of September 30, 2007, all $15.0 million of total unused commitments under Missions credit facility were
available for borrowing.
|--- | -------------------------------------------------------------------------------------------------------------------------------------

Cash Flows  Operating Activities

The comparative net cash flows provided by operating activities decreased by $27 thousand during the nine months ended September 30, 2007 compared to
the same period in 2006. The decrease was primarily due to a decrease of $0.7 million resulting from the timing of payments made for accounts payable and accrued expenses and a decrease of $0.3 million in cash flows from deferred revenue, mostly
offset by an increase of $0.8 million resulting from the timing of payments made to reduce our payable to Nexstar and an increase of $0.2 million resulting from the timing of collections of accounts receivable.

Cash paid for interest increased by $0.2 million during the nine months ended September 30, 2007 compared to the same period in 2006 due to higher
interest rates incurred during the nine months ended September 30, 2007 compared to the same period in 2006 under our senior credit facility, partially offset by a reduction in the amount outstanding under our senior credit facility during
2007.



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



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Cash Flows  Investing Activities

The comparative net cash flows used for investing activities increased by $0.6 million during the nine months ended September 30, 2007 compared to
the same period in 2006. Cash flows from investing activities consisted of cash used for capital additions and acquisition-related payments.

Capital expenditures were $1.4 million for the nine months ended September 30, 2007, compared to $1.2 million for the same period in 2006. The increase was primarily attributed to digital conversion expenditures, which increased from
$1.0 million for the nine months ended September 30, 2006 to $1.4 million for the same period in 2007.

Acquisition-related payments
for the nine months ended September 30, 2007 consisted of a $0.4 million down payment for our pending acquisition of KTVE.

Cash Flows 
Financing Activities

The comparative net cash flows used for financing activities, consisting of scheduled term loan maturities
under our senior secured credit facility, were $1.3 million for both the nine months ended September 30, 2007 and 2006.

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

Future Sources of Financing and Debt Service Requirements

As of September 30, 2007, we had debt of $169.2
million, which represented 224.5% of our total capitalization. Our high level of debt requires that a substantial portion of cash flow be dedicated to pay principal and interest on debt which will reduce the funds available for working capital,
capital expenditures, acquisitions and other general corporate purposes.

The total amount of borrowings available to us under the
revolving loan commitment of our senior secured credit facility is based on covenant calculations contained in Nexstars credit agreement. As of September 30, 2007, all $15.0 million of total unused commitments under our credit facility
were available for borrowing.

The following table summarizes the approximate aggregate amount of principal indebtedness scheduled to
mature for the periods referenced as of September 30, 2007:



|                       |  |                |         |                   |   |           |  |           |       |            |   |       |  |   |        
|---------------------- |  | -------------- | ------- | ----------------- | - | --------- |  | --------- | ----- | ---------- | - | ----- |  | - | -------
|                       |  | Total          |         | Remainder of 2007 |   | 2008-2009 |  | 2010-2011 |       | Thereafter
|                       |  | (in thousands)
|Senior credit facility |  | $              | 169,246 |                   | $ | 432       |  | $         | 3,454 |            | $ | 3,454 |  | $ | 161,906

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

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

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

Collateralization and Guarantees of Debt

Nexstar Broadcasting Group, Inc. (Nexstars ultimate parent) and its subsidiaries guarantee full payment of all obligations under our bank credit facility in the event of our default. Similarly, we are a
guarantor of Nexstars bank credit facility and the senior subordinated notes issued by Nexstar. The bank credit facilities are collateralized by a security interest in substantially all the combined assets, excluding FCC licenses, of Nexstar
and us. As of September 30, 2007, Nexstar had a maximum commitment of $242.8 million under its bank credit facility, of which $189.3 million of debt was outstanding, and had issued an aggregate principal amount of $200.0 million of senior
subordinated notes.

Debt Covenants

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



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Cash Requirements for DTV Conversion

Television broadcasting in the United States is moving from an analog transmission system to a digital transmission system. The conversion from
broadcasting in the analog format to the digital format is expensive. Our conversion to a low-power DTV signal required an average initial capital expenditure of approximately $0.2 million per station. All of the television stations that we own and
operate are broadcasting at least a low-power digital television signal.

Except for stations which have requested waiver of the FCCs
deadline for construction, broadcast television stations are required to be broadcasting a full-power DTV signal. As of September 30, 2007, Missions stations KOLR, WUTR, WTVO, WYOU and KRBC are broadcasting with full-power DTV signals.
The FCC has authorized Mission to operate DTV facilities for its remaining stations at low-power until November 18, 2007. Requests to extend the authority to broadcast low-power DTV signals for Missions remaining stations will be filed
with the FCC before November 18, 2007. Under the FCCs rules, these stations will be allowed to continue to operate at low-power until action is taken on the extension requests. If the FCC denies this further request for extension of time,
the stations may lose interference protection for their signals outside their low-power coverage area.

DTV conversion expenditures were
$1.4 million and $1.0 million, respectively, for the nine months ended September 30, 2007 and 2006. We estimate that it will require an average capital expenditure of approximately $1.5 million per station (for 8 stations as of
September 30, 2007) to modify our remaining stations DTV transmitting equipment for full-power DTV operations, including costs for the transmitter, transmission line, antenna and installation, and estimated costs for tower upgrades and/or
modifications. We anticipate these expenditures will be funded through available cash on hand and cash generated from operations as incurred in future years.

Cash Requirements for Pending Transactions

On April 18, 2006, we and Nexstar announced
that we had filed an application with the FCC for consent to assignment of the license for KFTA Channel 24 (Ft. Smith, Arkansas) from Nexstar to us. Consideration for this transaction is set at $5.6 million. We intend to finance this transaction
through cash on hand and borrowings under our senior secured credit facility.

On June 27, 2007, we entered into a purchase agreement
to acquire substantially all the assets of KTVE, the NBC affiliate serving the Monroe, Louisiana/El Dorado, Arkansas market for $7.7 million in cash. Pursuant to the terms of the agreement, we made a down payment of $0.4 million against the
purchase price in June 2007. We intend to finance this acquisition through borrowings under our senior secured credit facility.

No
Off-Balance Sheet Arrangements

At September 30, 2007, we did not have any relationships with unconsolidated entities or
financial partnerships, such as entities often referred to as structured finance or variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited
purposes. We are, therefore, not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Critical Accounting Policies and Estimates

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

Information with respect to our critical accounting policies which we believe could
have the most significant effect on our reported results and require subjective or complex judgments by management is contained on pages 27 through 29 in Part II, Item 7, Managements Discussion and Analysis of
Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2006. Management believes that as of September 30, 2007 there has been no material change to this
information.



Nonmonetary Asset Exchanges

In connection with a spectrum allocation exchange ordered by the FCC within the 1.9 GHz band, Sprint Nextel Corporation
(Nextel) is required to replace certain existing analog equipment with comparable digital equipment. The Company has agreed to accept the substitute equipment that Nextel will provide and in turn must relinquish its existing equipment to
Nextel. Neither party will have any continuing involvement in the equipment transferred following the exchange. We account for this arrangement as an exchange of assets in accordance with Accounting Principles Board No. 29, Accounting for
Nonmonetary Transactions, as amended by SFAS No. 153, Exchanges of Nonmonetary Assets.



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These transactions are recorded at the estimated fair market value of the equipment received. We derive
our estimate of fair market value from quoted prices obtained from manufacturers and vendors for the specific equipment we acquire. As equipment is exchanged, the Company records a gain to the extent that the fair market value of the equipment
received exceeds the carrying amount of the equipment relinquished.

Recent Accounting Pronouncements

Refer to Note 2 of our condensed financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of our adoption of
Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (FIN No. 48) and other recently issued
accounting pronouncements, including our expected date of adoption and effects on results of operations and financial position.

Cautionary Note
Regarding Forward-Looking Statements

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

Although we believe that the expectations reflected in any of our forward-looking
statements are reasonable, actual results could differ from this projection or assumption in any of our forward-looking statements. Our future financial position and results of operations, as well as any forward-looking statements, are subject to
change and inherent risks and uncertainties, including those described in our Annual Report on Form 10-K for the year ended December 31, 2006 and in our other filings with the Securities and Exchange Commission. The forward-looking statements
made in this Quarterly Report on Form 10-Q are made only as of the date hereof, and we do not have or undertake any obligation to update any forward-looking statements to reflect subsequent events or circumstances unless otherwise required by law.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

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

All borrowings at September 30, 2007 under our senior credit facility bear interest at 6.95%, which represented the base rate, or LIBOR, plus the
applicable margin, as defined. Interest is payable in accordance with the credit agreement.

The following table estimates the changes to
cash flow from operations as of September 30, 2007 if interest rates were to fluctuate by 100 or 50 basis points, or BPS (where 100 basis points represents one percentage point), for a twelve-month period:



|                       |  |                        |        |                          |   |                        |        |   |         |  |   |        |  |   |       
|---------------------- |  | ---------------------- | ------ | ------------------------ | - | ---------------------- | ------ | - | ------- |  | - | ------ |  | - | ------
|                       |  | Interest rate decrease |        | No changeto interestrate |   | Interest rate increase
|                       |  | 100 BPS                |        | 50 BPS                   |   |                        | 50 BPS |   | 100 BPS
|                       |  | (in thousands)        
|Senior credit facility |  | $                      | 10,067 |                          | $ | 10,913                 |        | $ | 11,759  |  | $ | 12,606 |  | $ | 13,452

Impact of Inflation

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



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ITEM 4. Controls and Procedures

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

(b) Changes in Internal Control over Financial Reporting. During the quarterly period as of the end of the period covered by this report, there
have been no changes in Missions internal control over financial reporting identified in connection with the evaluation described in paragraph (a) above that have materially affected or are reasonably likely to materially affect
Missions internal control over financial reporting.



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PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

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

ITEM 1A. Risk Factors

There are no material changes from the risk factors previously disclosed in Part
I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2006.

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

None.

ITEM 3. Defaults Upon Senior Securities

None.

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

None.

ITEM 5. Other Information

None.

ITEM 6. Exhibits



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

---

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



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SIGNATURES

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



MISSION BROADCASTING, INC./s/ DAVID S. SMITHBy:

David S. SmithIts:

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


Dated: November 7, 2007



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