<PAGE>

================================================================================
               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549

                               -----------------

                                   FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

    for the fiscal year ended December 31, 2001

[_] 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: 333-68964

                               -----------------

                       NEXSTAR FINANCE HOLDINGS, L.L.C.
                        NEXSTAR FINANCE HOLDINGS, INC.
            (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                          <C>
                                                                                  23-3083129
                          Delaware                                                23-3063153
          (State of Organization or Incorporation)                    (IRS Employer Identification No.)

           200 Abington Executive Park, Suite 201
             Clarks Summit, Pennsylvania 18411                                  (570) 586-5400
(Address of Principal Executive Offices, including Zip Code) (Registrant's Telephone Number, Including Area Code)
</TABLE>

          Securities Registered Pursuant to Section 12(b) of the Act:

                                     None

          Securities Registered Pursuant to Section 12(g) of the Act:

                                     None

                               -----------------

   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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this
Form 10-K. [X]

   As of December 31, 2001, Nexstar Finance Holdings, L.L.C. had one member,
Nexstar Finance Holdings II, L.L.C., and Nexstar Finance Holdings, Inc. had
1,000 shares of common stock outstanding.

================================================================================

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                        Page
                                                                        ----
   <C>      <S>                                                         <C>
   PART I
   ITEM 1.  BUSINESS...................................................   3
   ITEM 2.  PROPERTIES.................................................  25
   ITEM 3.  LEGAL PROCEEDINGS..........................................  27
   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........  27

   PART II
   ITEM 5.  MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS....  28
   ITEM 6.  SELECTED FINANCIAL DATA....................................  28
   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
            AND RESULTS OF OPERATIONS..................................  29
   ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.  41
   ITEM 8.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...  42
   ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
            AND FINANCIAL DISCLOSURE...................................  42

   PART III
   ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS...........................  43
   ITEM 11. EXECUTIVE COMPENSATION.....................................  44
   ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT.................................................  45
   ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............  47

   PART IV
   ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
            FORM 8-K...................................................  50

   Index to Consolidated Financial Statements.......................... F-1

   Index to Exhibits................................................... E-1
</TABLE>

                                      i

<PAGE>

General

   As used in this Annual Report on Form 10-K and unless the context indicates
otherwise, (1) "Nexstar" refers to Nexstar Finance Holdings, L.L.C. and its
consolidated subsidiaries including Nexstar Finance Holdings, Inc.; (2)
"Nexstar Finance" refers to Nexstar Finance, L.L.C. and its consolidated
subsidiaries including Nexstar Finance, Inc.; (3) "Nexstar Broadcasting Group"
refers to Nexstar Broadcasting Group, L.L.C. but not its direct or indirect
subsidiaries; (4) "Nexstar Broadcasting" refers to Nexstar Broadcasting Group,
L.L.C., and all of Nexstar Broadcasting Group, L.L.C.'s direct and indirect
subsidiaries, including Nexstar; (5) "Bastet Group" refers to Bastet
Broadcasting, Inc., Mission Broadcasting of Joplin, Inc., Mission Broadcasting
of Wichita Falls, Inc. and all of their respective subsidiaries; and (6) all
references to "we," "our," "ours," and "us" refer, collectively, to Nexstar and
the Bastet Group. Nexstar has time brokerage, shared services and joint sales
agreements relating to the television stations owned by the Bastet Group, but
does not own any of the equity interests in the Bastet Group. For a description
of the relationship between Nexstar and the Bastet Group, see "Certain
Relationships and Related Transactions."

   In the context of describing ownership of television stations in a
particular market, the term "duopoly" refers to owning or deriving the economic
benefit, through joint sales agreements, time brokerage agreements and shared
services agreements, from two or more stations in a particular market. For more
information on how we derive economic benefit from a duopoly, see Item 1.
"Business" and Item 13. "Certain Relationships and Related Transactions."

   There are 210 generally recognized television markets, known as Designated
Market Areas, or DMAs, in the United States. DMAs are ranked in size according
to various factors based upon actual or potential audience. DMA rankings
contained in this Annual Report on Form 10-K are from the Nielsen Station Index
dated November 2001 as estimated by the A.C. Nielsen Company as published in
BIA Investing in Television, 4th ed. 2001.

   Unless the context indicates otherwise: (1) data relating to market rank,
television household data and audience share are from The Neilsen Station Index
for Sunday to Saturday, 7:00 AM to 1:00AM dated November 2001 and (2) the term
"station" or "commercial station" means a television broadcast station and does
not include non-commercial television stations, cable program services or
networks (for example, CNN, MTV and ESPN) or stations that do not meet the
minimum Nielsen reporting standards (for example, weekly cumulative audience
share of at least 2.5% for Sunday to Saturday, 7:00 a.m. to 1:00 a.m.); and (5)
the term "independent" describes a commercial television station that is not
affiliated with the ABC, CBS, NBC, Fox, WB, PAX or UPN television networks.

   Reference is made in this Annual Report on Form 10-K to the following
trademarks/tradenames which are owned by the third parties referenced in
parentheses: Dharma & Greg, King of the Hill, The Simpsons, Divorce Court (20th
Century Fox Film Corporation); Seinfeld, Ricky Lake (Columbia Tristar
Television Distribution, a unit of Sony Pictures); Judge Judy, Entertainment
Tonight, Spin City, Montel, Frasier, Andy Griffith (Paramount Distribution);
The Rosie O'Donnell Show, Extra, Friends, Martin (Warner Brothers Domestic
Television Distribution, a division of Time Warner Entertainment Co. LP); The
Maury Povich Show, Sally (Studios USA Television Distribution LLC); That 70's
Show, Third Rock From The Sun (Carsey Werner Distribution LLC); Home
Improvement (Buena Vista Television, Inc.); Everybody Loves Raymond (Eyemark
Entertainment); and The Oprah Winfrey Show, Wheel of Fortune, Jeopardy,
Hollywood Squares (King World Productions, Inc.).

   This Annual Report on Form 10-K 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,
revenues, financial performance, liquidity and capital resources or other
financial items; any assumptions or projections about the television
broadcastings industry, any statements of our plans, strategies and objectives
for our future operations; any statements

                                      1

<PAGE>

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," "estimate,"
"intend," "continue," "believe," "expect" or "anticipate" 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 a
projection or assumption in any of our forward-looking statements. Our future
financial condition and results of operations, as well as any forward-looking
statements are subject to change and inherent risks and uncertainties discussed
under Item 1. "Business--Risks Related to Our Business" and elsewhere in this
Annual Report on Form 10-K as well as in our other filings with the Securities
and Exchange Commission. The forward-looking statements made in this Annual
Report on Form 10-K are made only as of the date hereof and we do not have or
undertake any obligation to publicly update any forward-looking statements to
reflect new information or subsequent events or circumstances unless otherwise
required by law.


                                      2

<PAGE>

                                    PART I

Item 1.  Business

Overview

   Nexstar's predecessor was formed in 1996 to own and operate television
stations in small- and medium-sized markets across the United States. We
completed our first acquisition in June 1996 with the purchase of WYOU, the CBS
affiliate in Wilkes Barre-Scranton, Pennsylvania. Our stations are
geographically diverse, existing in seven states stretching from Texas to New
York. We also benefit from diversity in our network affiliations. Specifically,
the stations in our group have primary affiliation agreements with all four
major networks (six with NBC, five with CBS, three with ABC, two with Fox) and
one with UPN. We currently own and operate 17 stations in 13 markets. In three
of the markets in which we operate, we have duopolies. Additionally, in
December 2001, Mission Broadcasting of Joplin, Inc. entered into a time
brokerage agreement to provide certain programming to and sell the advertising
time of KODE, the ABC affiliate in Joplin, Missouri, pending the acquisition of
the station's assets, which is scheduled to close on September 30, 2002. The
purchase price for the assets is $14.0 million and will be financed under the
Bastet Group's senior credit facility. Effective December 1, 2001, Nexstar
entered into an outsourcing agreement with a subsidiary of Sinclair Broadcast
Group, Inc. to provide certain engineering, production, sales and
administrative services for WYZZ, the Fox affiliate in the Peoria-Bloomington,
Illinois market. Nexstar and Sinclair Broadcast Group, Inc. will share in the
combined broadcast cash flow generated by WYZZ and Nexstar-owned WMBD. For the
year ended December 31, 2001, no single station contributed more than 11.3% of
total net revenue or 16.2% of broadcast cash flow with the majority of the
stations contributing no more than 7.0% of total net revenue or 7.0% of
broadcast cash flow.

   We believe there are significant advantages in focusing on small- to
medium-sized markets, most of which result from a lower level of local
competition as compared to larger markets. Many of the broadcast television
competitors in our markets are, generally, not as professionally managed or
well capitalized as we are, and are often family owned and operated. By
providing equity incentives to our station general managers, we are able to
attract management with experience in larger markets who employ marketing and
sales techniques that are not typically utilized in our markets. Lastly, in
negotiating with programming vendors, we are able to exercise leverage because
there are typically more programs available than outlets. In many of our
markets, there are only two or three other competing commercial local
television stations.

   We target markets that have stable employment and population, a diverse base
of employers (government, education, business), and communities receptive to
local programming. Broadcast television stations in these markets offer an
opportunity to generate attractive and stable broadcast cash flows while
providing limited competition for viewers and syndicated programming. As a
result of the implementation of our business strategies, discussed below, we
have experienced significant growth.

Business Strategy

   Within our markets, we seek to maximize revenue growth and broadcast cash
flow through the following strategies:

   Develop Leading Local Franchises.  Each of our stations seeks to create a
distinct identity, primarily through the quality of its local news programming.
In 10 of our 13 markets, we rank number one or number two in news viewership.
Strong local news generates high ratings among attractive demographic profiles
and enhances audience loyalty, which results in higher ratings for programs
both preceding and following the news. We continually invest in our stations'
news product and have increased the local news programming of our stations,
since acquisition, in the aggregate by 25.1% to 280 hours per week. Extensive
local sports coverage further differentiates us from our competitors and adds
to our local advertising appeal. In addition, each station actively sponsors
community events, which has led to stronger community relationships and
increased local advertising.

                                      3

<PAGE>

   Emphasize Local Sales.  We employ a high-quality local sales force in each
of our markets to capitalize on our investment in local programming. We seek to
maximize local advertising revenues, which are generally more stable than
national advertising revenues and which we directly manage through our own
local sales forces. For the year ended December 31, 2001, the percentage of our
total spot revenues, excluding political, from local advertising was 62.5%,
while for the year ended December 31, 2000, our total spot revenues, excluding
political, from local advertising was 61.9%, each of which we believe is higher
than other station groups. While we maintain strict cost controls, in most of
our markets we have increased the size and quality of our local sales force.
Since acquiring our stations, we have added a net total of 26 account
executives, a 30.0% increase in our overall sales force. We also invest in our
sales personnel by implementing comprehensive training programs and employing a
sophisticated inventory tracking system to help maximize advertising rates and
the amount of inventory sold in each time period.

   Maintain Strict Cost Controls.  We emphasize strict controls on operating
and programming costs in order to increase broadcast cash flow. We continually
seek to identify and implement cost savings opportunities at each of our
stations, and our overall size benefits each station with respect to
negotiating favorable terms with programming suppliers and other vendors. By
leveraging our size and corporate management expertise, we are able to achieve
economies of scale by providing programming, financial, sales and marketing
support to our entire station portfolio. Due to the significant negotiating
leverage afforded by our scale and limited competition in our markets, our cash
programming expenses were 7.2% of the total net revenue for the years ended
December 31, 2001 and 2000, which we believe is lower than other station groups.

   Attract and Retain High Quality Management.  We are able to attract and
retain station general managers with proven track records in larger television
markets by offering equity incentives, which typically are not offered by other
station operators in our markets. All of Nexstar's station general managers
have purchased equity interests in Nexstar Broadcasting. Our station general
managers have an average of over 20 years of experience in the television
broadcasting industry. Since Nexstar's inception, there has been no turnover at
our general manager level, with the exception of that which occurred as a
result of retirement or actions initiated by us.

   Pursue Duopoly Opportunities. We seek to eliminate redundant management and
achieve significant economies of scale in marketing, programming and capital
expenditures by combining the operations of two or three stations in one
market, typically into a single physical facility. For example, in our Wichita
Falls, Texas facility, we simultaneously operate three separate stations, KFDX
(NBC), KJTL (Fox) and KJBO-LP (UPN), with a single general sales manager,
engineering department, production crew and administrative staff. We
selectively evaluate acquisitions and asset exchanges with the objective of
obtaining additional duopolies.

                                      4

<PAGE>

Our Stations

   The following chart sets forth general information about our stations:

<TABLE>
<CAPTION>
                                                                            Commercial
                                               Market             Station   Stations in
Station                   Market                Rank  Affiliation Rank/(1)/ Market/(2)/
------------ --------------------------------- ------ ----------- --------  -----------
<C>          <S>                               <C>    <C>         <C>       <C>
WBRE         Wilkes Barre-Scranton, PA           52       NBC        2           4
WYOU/(3)/    Wilkes Barre-Scranton, PA           52       CBS        3           4
WROC         Rochester, NY                       71       CBS        1           4
KTAL         Shreveport, LA                      79       NBC        3           5
WCIA/WCFN    Champaign-Springfield-Decatur, IL   82       CBS        1           5
WMBD         Peoria-Bloomington, IL             116       CBS        2           4
WYZZ/(4)/    Peoria-Bloomington, IL             116       Fox        4           4
KBTV         Beaumont-Port Arthur, TX           136       NBC        3           3
KFDX         Wichita Falls, TX-Lawton, OK       141       NBC        1           4
KJTL/(7)/    Wichita Falls, TX-Lawton, OK       141       Fox        4           4
KJBO-LP/(7)/ Wichita Falls, TX-Lawton, OK       141       UPN        NA          4
KSNF         Joplin, MO-Pittsburgh, KS          142       NBC        3           3
KODE/(6)/    Joplin, MO-Pittsburgh, KS          142       ABC        2           3
WJET         Erie, PA                           143       ABC        3           4
WFXP/(5)/    Erie, PA                           143       Fox        4           4
WTWO         Terre Haute, IN                    145       NBC        2           3
KMID         Midland-Odessa, TX                 154       ABC     2 (tied)       5
KTAB         Abilene-Sweetwater, TX             162       CBS        1           4
KQTV         St. Joseph, MO                     189       ABC        1           1
</TABLE>
--------
(1) Station ranking in market is determined by audience shares from November
    2001.
(2) The term "commercial station" means a television broadcast station and does
    not include non-commercial television stations, cable program services or
    networks, or stations that do not meet the minimum Nielson reporting
    standards.
(3) Owned by Bastet Broadcasting, Inc. and operated under a shared services
    agreement.
(4) Owned by a subsidiary of Sinclair Broadcasting Group, Inc. and operated
    under an outsourcing agreement with Nexstar.
(5) Owned by Bastet Broadcasting, Inc. and operated under a time brokerage
    agreement.
(6) Owned by a subsidiary of GOCOM Holdings, LLC and operated under a time
    brokerage agreement with Mission Broadcasting of Joplin, Inc.
(7) Owned by Mission Broadcasting of Wichita Falls, Inc. and operated under a
    shared services agreement and joint sales agreement.

Wilkes Barre-Scranton, PA

WBRE

   Station Profile.  Nexstar acquired WBRE, an NBC affiliate, in January 1998.
For the November 2001 ratings period, WBRE ranked second in its market, with an
audience share of 13.0%. The station's syndicated programming includes Wheel of
Fortune, The Oprah Winfrey Show and Seinfeld.

WYOU

   Station Profile.  Nexstar acquired WYOU, a CBS affiliate, in June 1996 and
sold it to the Bastet Group in 1998, when a shared services agreement was
entered into with WBRE. For the November 2001 ratings period, WYOU ranked third
in its market, with an audience share of 10.0%. The station's syndicated
programming includes King of the Hill, Entertainment Tonight, and Judge Judy.

Rochester, NY

WROC

   Station Profile.  Nexstar acquired WROC, a CBS affiliate, in December 1999.
For the November 2001 ratings period, WROC ranked first in its market, with an
audience share of 16.0%. The station's syndicated programming includes
Jeopardy, Wheel of Fortune and Entertainment Tonight.

                                      5

<PAGE>

Shreveport, LA

KTAL

   Station Profile.  Nexstar acquired KTAL, an NBC affiliate, in November 2000.
For the November 2001 ratings period, KTAL ranked third in its market, with an
audience share of 8.0%. The station's syndicated programming includes Wheel of
Fortune, Hollywood Squares and Divorce Court.

Champaign-Springfield-Decatur, IL

WCIA

   Station Profile.  Nexstar acquired WCIA, a CBS affiliate, in January 2001.
For the November 2001 ratings period, WCIA ranked first in its market, with an
audience share of 17.0%. The station's syndicated programming includes The
Oprah Winfrey Show, Hollywood Squares and Frasier.

WCFN

   Station Profile.  Nexstar acquired WCFN, which is located in Springfield, in
conjunction with WCIA. Nexstar is currently using WCFN to simulcast WCIA to the
southwest segment of the DMA. The FCC granted duopoly status for WCFN and
Nexstar is entering into an affiliate agreement with UPN to create an
additional broadcasting outlet. Launching WCFN as a stand-alone station will
allow the station to benefit from substantial operational efficiencies, and
will result in additional inventory to sell in the market. The initial
broadcast of WCFN as a UPN station is scheduled for the second quarter of 2002.
The station's syndicated programming will include Martin, Ricky Lake and Andy
Griffith.

Peoria-Bloomington, IL

WMBD

   Station Profile.  Nexstar acquired WMBD, a CBS affiliate, in January 2001.
For the November 2001 ratings period, WMBD ranked second in its market, with an
audience share of 15.0%. The station's syndicated programming includes Wheel of
Fortune, Jeopardy and Hollywood Squares.

WYZZ

   Station Profile.  Nexstar entered into an outsourcing agreement with a
subsidiary of Sinclair Broadcasting Group, Inc. effective December 1, 2001. The
agreement allows Nexstar to provide certain engineering, production, sales and
administrative services for WYZZ, the Fox affiliate located in Bloomington.
Nexstar has identified potential cost savings of over $0.8 million due to the
elimination of redundant positions. Nexstar is also planning to initiate a 9
p.m. newscast in the second quarter of 2002 to enhance local programming and
target the Bloomington audience. For the November 2001 ratings period, WYZZ
ranked fourth in its market, with an audience share of 7.0%. The station's
syndicated programming includes Spin City, Frasier and Everybody Loves Raymond.

Beaumont-Port Arthur, TX

KBTV

   Station Profile.  Nexstar acquired KBTV, an NBC affiliate, in January 1998.
For the November 2001 ratings period, KBTV ranked third in its market, with an
audience share of 9.0%. The station's syndicated programming includes Jeopardy,
Hollywood Squares and The Maury Povich Show.

Wichita Falls, TX--Lawton, OK

KFDX

   Station Profile.  Nexstar acquired KFDX, an NBC affiliate, in January 1998.
For the November 2001 ratings period, KFDX ranked first in its market, with an
audience share of 15.0%. The station's syndicated programming includes
Entertainment Tonight, Montel and The Rosie O'Donnell Show.

                                      6

<PAGE>

KJTL

   Station Profile.  A member of the Bastet Group acquired KJTL, a Fox
affiliate, in June 1999. For the November 2001 ratings period, KJTL ranked
fourth in its market, with an audience share of 6.0%. The station's syndicated
programming includes Frasier, Friends and Judge Judy.

KJBO-LP

   Station Profile.  A member of the Bastet Group acquired KJBO-LP, a UPN
affiliate, in June 1999. Operating through its joint sales agreement and shared
services agreement with KFDX, KJBO-LP is a highly efficient operation and
produces a broadcast cash flow margin greater than 80.0%.

Joplin, MO--Pittsburg, KS

KSNF

   Station Profile.  Nexstar acquired KSNF, an NBC affiliate, in January 1998.
For the November 2001 ratings period, KSNF ranked third in its market, with an
audience share of 13.0%. The station's syndicated programming includes Frasier,
Judge Judy and The Rosie O'Donnell Show.

KODE

   Station Profile.  A member of the Bastet Group entered into a time brokerage
agreement in December 2001 to provide certain programming and sell the
advertising time on KODE, an ABC affiliate, pending the acquisition of its
assets, at which time it will enter into a shared services agreement with
Nexstar, whereby KSNF will provide certain services to KODE. Once the stations
share the same facility, the anticipated cost savings of eliminating redundant
positions and other expenses is approximately $0.8 million. For the November
2001 ratings period, KODE ranked second in its market, with an audience share
of 15.0%. The station's syndicated programming includes Seinfeld, Jeopardy and
Oprah.

Erie, PA

WJET

   Station Profile.  Nexstar acquired WJET, an ABC affiliate, in January 1998.
For the November 2001 ratings period, WJET ranked third in its market, with an
audience share of 15.0%. The station's syndicated programming includes Frasier,
Seinfeld and Everybody Loves Raymond.

WFXP

   Station Profile.  Nexstar began its time brokerage agreement with WFXP, a
Fox affiliate, in August 1998. In November 1998, a member of the Bastet Group
acquired WFXP. For the November 2001 ratings period, WFXP ranked fourth in its
market, with an audience share of 6.0%. WFXP's syndicated programming includes
Friends, The Simpsons and Spin City.

Terre Haute, IN

WTWO

   Station Profile.  Nexstar acquired WTWO, an NBC affiliate, in April 1997.
For the November 2001 ratings period, WTWO ranked second in its market, with an
audience share of 17.0%. The station's syndicated programming includes The
Oprah Winfrey Show, Jeopardy and Wheel of Fortune.

Midland-Odessa, TX

KMID

   Station Profile.  Nexstar acquired KMID, an ABC affiliate, in September
2001. For the November 2001 ratings period, KMID tied for second in market
ranking, with an audience share of 12.0%. The station's syndicated programming
includes The Oprah Winfrey Show, Wheel of Fortune and Jeopardy.

                                      7

<PAGE>

Abilene, TX

KTAB

   Station Profile.  Nexstar purchased KTAB, a CBS affiliate, in August 1999.
For the November 2001 ratings period, KTAB ranked first in its market, with an
audience share of 16.0%. The station's syndicated programming includes The
Oprah Winfrey Show, Wheel of Fortune and Jeopardy.

St. Joseph, MO

KQTV

   Station Profile.  Nexstar acquired KQTV, an ABC affiliate, in April 1997.
KQTV is the only commercial television station in its market. In the November
2001 ratings period, KQTV had an audience share of 19.0%. The station's
syndicated programming includes The Oprah Winfrey Show, Wheel of Fortune and
Friends.

Industry Background

  The Television Broadcasting Industry

   Commercial television broadcasting began in the United States on a regular
basis in the 1940s. There are a limited number of channels available for
broadcasting in any one geographic area. Television stations can be
distinguished by the frequency on which they broadcast. Television stations
that broadcast over the very high frequency or VHF band (channels 2-13) of the
spectrum generally have some competitive advantage over television stations
which broadcast over the ultra-high frequency or UHF band (channels above 13)
of the spectrum because the former usually have better signal coverage and
operate at a lower transmission cost. However, the improvement of UHF
transmitters and receivers, the complete elimination from the marketplace of
VHF-only receivers and the expansion of cable television systems have reduced
the VHF signal advantage. Any disparity between VHF and UHF is likely to
diminish even further in the coming era of digital television.

  The Market for Television Programming

   Television station revenues are primarily derived from local, regional and
national advertising and, to a lesser extent, from network compensation and
revenues from studio rental and commercial production activities. Advertising
rates are based upon a variety of factors, including a program's popularity
among the viewers an advertiser wishes to attract, the number of advertisers
competing for the available time, the size and demographic makeup of the market
served by the station, and the availability of alternative advertising media in
the market area. Rates are also determined by a station's overall ratings and
share in its market, as well as the station's ratings and share among
particular demographic groups which an advertiser may be targeting. Because
broadcast television stations rely on advertising revenues, declines in
advertising budgets, particularly in recessionary periods, adversely affect the
broadcast industry, and as a result may contribute to a decrease in the
revenues of broadcast television stations.

   All television stations in the country are grouped by A.C. Nielsen Company,
a national audience measuring service, into 210 generally recognized television
markets, known as designated market areas, or DMAs, that are ranked in size
according to various metrics based upon actual or potential audience. Each DMA
is determined as an exclusive geographic area consisting of all counties in
which the home-market commercial stations receive the greatest percentage of
total viewing hours. Nielsen periodically publishes data on estimated audiences
for the television stations in the various television markets throughout the
country. The estimates are expressed in terms of the station's "rating," which
is a percentage of the total potential audience in the market viewing a
station, or the station's "share," which is the percentage of the audience
actually watching television. Nielsen provides this data on the basis of local
television households and selected demographic groupings in the market. Nielsen
uses two methods of determining a station's ability to attract viewers. In
larger geographic markets, ratings are determined by a combination of meters
connected directly to selected television sets and weekly diaries of television
viewing, while in smaller markets only weekly diaries are completed.

                                      8

<PAGE>

   Whether or not a station is affiliated with one of the four major networks
(NBC, ABC, CBS or Fox) has a significant impact on the composition of the
station's revenues, expenses and operations. A typical network affiliate
receives the majority of its programming each day from the network. This
programming, along with cash payments, is provided to the affiliate by the
network in exchange for a substantial majority of the advertising time during
network programs. The network then sells this advertising time and retains the
revenues. The affiliates retains the revenues from the time sold during breaks
in and between network programs and programs the affiliate produces or
purchases from non-network sources.

   Broadcast television stations compete for advertising revenues primarily
with other broadcast television stations, and to a lesser extent, with radio
stations and cable system operators serving the same market. Non-commercial,
religious and Spanish-language broadcasting stations in many markets compete
with commercial stations for viewers. In addition, the Internet and other
leisure activities may draw viewers away from commercial stations.

  Developments in the Television Market

   Through the 1970s, network television broadcasting enjoyed virtual dominance
in viewership and television advertising revenue, because network-affiliated
stations competed only with each other in most local markets. Beginning in the
1980s and continuing through the 1990s, however, this level of dominance
changed as more local stations were authorized by the FCC and marketplace
choices expanded with the growth of independent stations, new networks such as
UPN, WB and PAX, and cable television services.

   Cable television systems, which grew at a rapid rate beginning in the early
1970s, were initially used to retransmit broadcast television programming to
paying subscribers in areas with poor broadcast signal reception. In the
aggregate, cable-originated programming has emerged as a significant competitor
for viewers of broadcast television programming. With the increase in cable
penetration in the 1980s and 1990s, the advertising share of cable networks has
increased. Notwithstanding these increases in cable viewership and advertising,
over-the-air broadcasting remains the primary distribution system for mass
market television advertising. Basic cable penetration (the percentage of
television households which are connected to a cable system) in our television
markets ranges from 56.0% to 82.0%.

   In acquiring programming to supplement network programming, network
affiliates compete with other broadcasting stations in their markets. Cable
systems generally do not compete with local stations for programming. In the
past, the cost of programming increased dramatically, primarily because of an
increase in the number of new independent stations and a shortage of desirable
programming. Recently, however, program prices have stabilized as a result of
increases in the supply of programming.

   The FCC finalized its allotment of new advanced television channels to
existing broadcast stations in the first half of 1998. Advanced television is a
digital television, or DTV, transmission system that delivers improved video
and audio signals including high definition television and also has substantial
multiplexing and data transmission capabilities. For each licensed television
station, the FCC has allocated a matching DTV channel. Under current FCC
guidelines, all commercial television station operators must complete
construction of and begin broadcasting with their digital transmission systems
no later than May 1, 2002, unless an extension of time has been granted.
Network affiliated stations in the top 10 markets were required to begin
digital broadcasting by May 1999, and in the top 30 markets by November 1,
1999. By the end of 2006, the FCC expects television broadcasters to cease
non-digital broadcasting and return one of their channels to the U.S.
government, provided that 85.0% of households within the relevant DMA have the
capability to receive a digital signal.

Advertising Sales

  General

   Television station revenues are primarily derived from the sale of local and
national advertising. Television stations compete for advertising revenues
primarily with other broadcast television stations, radio stations, cable
system operators and programmers, and newspapers serving the same market.

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   All network-affiliated stations are required to carry spot advertising sold
by their networks which reduces the amount of advertising spots available for
sale by our stations. Our stations sell all of the remaining advertising to be
inserted in network programming and all of the advertising in non-network
programming, retaining all of the revenues received from these sales. A
national syndicated program distributor will often retain a portion of the
available advertising time for programming it supplies in exchange for no fees
or reduced fees charged to the stations for such programming. These programming
arrangements are referred to as barter programming.

   Advertisers wishing to reach a national audience usually purchase time
directly from the networks, or advertise nationwide on a case-by-case basis.
National advertisers who wish to reach a particular region or local audience
often buy advertising time directly from local stations through national
advertising sales representative firms. Local businesses purchase advertising
time directly from the stations' local sales staffs.

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

  Local Sales

   Local advertising time is sold by each station's local sales staff who call
upon advertising agencies and local businesses, which typically include car
dealerships, retail stores and restaurants. Compared to revenues from national
advertising accounts, revenues from local advertising are generally more stable
and more controllable. We seek to attract new advertisers to television, and to
increase the amount of advertising time sold to existing local advertisers by
relying on experienced local sales forces with strong community ties, producing
news and other programming with local advertising appeal and sponsoring or
co-promoting local events and activities. We place a strong emphasis on the
experience of our local sales staff and maintain an on-going training program
for sales personnel.

  National Sales

   National advertising time is sold through national sales representative
firms which call upon advertising agencies, whose clients typically include
automobile manufacturers and dealer groups, telecommunications companies, fast
food franchisers, and national retailers (some of which may advertise locally).

Network Affiliations

   Each station is affiliated with its network pursuant to an affiliation
agreement. WBRE, WTWO, KTAL, KBTV, KFDX and KSNF are affiliated with NBC. KTAB,
WROC, WCIA/WCFN, WMBD and WYOU are affiliated with CBS. WJET, KMID and KQTV are
affiliated with ABC. KJTL and WFXP are affiliated with Fox and KJBO-LP is
affiliated with UPN. KODE, owned by a subsidiary of GOCOM Holdings, LLC and
operated under a time brokerage agreement by Mission Broadcasting of Joplin,
Inc., is affiliated with ABC. WYZZ, owned by a subsidiary of Sinclair Broadcast
Group, Inc. and operated under an outsourcing agreement with Nexstar, is a Fox
affiliate.

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   Each affiliation agreement provides the affiliated station with the right to
broadcast all programs transmitted by the network with which it is affiliated.
In exchange, the network has the right to sell a substantial majority of the
advertising time during these broadcasts. In addition, for each hour that the
station elects to broadcast network programming, the network pays the station a
fee (with the exception of Fox and UPN), specified in each affiliation
agreement, which varies with the time of day. Typically, "prime-time"
programming (Monday through Saturday from 8:00 p.m. to 11:00 p.m., Eastern time
and Sunday from 7:00 p.m. to 11:00 p.m., Eastern time) generates the highest
hourly rates.

   Our NBC affiliation agreements for WBRE, WTWO, KBTV, KFDX, and KSNF expire
on December 31, 2008, while our NBC affiliation agreement for KTAL expires on
December 31, 2005. Our CBS affiliate agreement for KTAB expires on December 31,
2004. Our CBS affiliation agreement for WROC expires on January 31, 2005 and
our CBS affiliation agreement for WCIA/WCFN and WMBD expires on September 30,
2005. Our CBS affiliation agreement with WYOU expires on December 31, 2007. Our
ABC affiliation agreement for WJET expires on January 2, 2005. Our ABC network
affiliation agreement for KMID expires on July 15, 2005. Our ABC affiliation
agreement for KQTV expires on April 15, 2007. Our Fox affiliation agreement for
KJTL expires on November 30, 2003, while our Fox affiliation agreement for WFXP
expires on March 31, 2006. Our UPN affiliation agreement for KJBO-LP expires on
September 1, 2004; however, UPN may cancel this affiliation agreement at any
time with 30 days prior written notice. The ABC affiliation agreement for KODE
expires in August 2002. The Fox affiliation agreement for WYZZ is currently on
a month-to-month basis.

Competition

   Competition in the television industry takes place on several levels:
competition for audience, competition for programming (including news) and
competition for advertisers. Additional factors that are material to a
television station's competitive position include signal coverage and assigned
frequency. The broadcasting industry is continually faced with technological
change and innovation, the possible rise in popularity of competing
entertainment and communications media, and governmental restrictions or
actions of federal regulatory bodies, including the FCC and the Federal Trade
Commission, any of which could have a material effect on our operations.

   Audience.  Stations compete for viewership generally against other leisure
activities in which one could choose to engage rather than watch television.
Broadcast stations compete for audience share specifically on the basis of
program popularity, which has a direct effect on advertising rates. A portion
of the daily programming on our NBC, CBS, ABC, Fox and UPN affiliated stations
is supplied by the network with which each station is affiliated. In those
periods, the stations are dependent upon the performance of the network
programs in attracting viewers. Our stations program non-network time periods
with a combination of self-produced news, public affairs and other
entertainment programming, including news and syndicated programs purchased for
cash, cash and barter, or barter only. A majority of the daily programming on
our Fox and UPN affiliated stations consists of programming of this kind.

   Through the 1970s, network television broadcasting enjoyed virtual dominance
in viewership and television advertising revenues because network-affiliated
stations competed only with each other in most local markets. However, the
development of methods of video transmission other than over-the-air
broadcasting, and in particular the growth of cable television, has
significantly altered competition for audience share in the television
industry. These other transmission methods can increase competition for a
broadcasting station by bringing into its market distant broadcasting signals
not otherwise available to the station's audience. Other sources of competition
include home entertainment systems, such as VCRs, DVDs and television game
devices. Transmission of video programming over broadband Internet may be a
future source of competition to television broadcasters.

   Although cable television systems were initially used to retransmit
broadcast television programming to subscribers in areas with poor broadcast
signal reception, significant increases in cable television penetration

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occurred throughout the 1970s and 1980s in areas that did not have signal
reception problems. As the technology of satellite program delivery to cable
systems advanced in the late 1970s, development of programming for cable
television accelerated dramatically, resulting in the emergence of multiple,
national-scale program alternatives and the rapid expansion of cable television
and higher subscriber growth rates. Historically, cable operators have not
sought to compete with broadcast stations for a share of the local news
audience. Recently, however, certain cable operators have elected to compete
for these audiences, and the increased competition could have an adverse effect
on our advertising revenues.

   Further advances in technology may increase competition for household
audiences and advertisers. Video compression techniques, now under development
for use with current cable channels or direct broadcast satellites, are
expected to reduce the bandwidth required for television signal transmission.
These compression techniques, as well as other technological developments, are
applicable to all video delivery systems, including over-the-air broadcasting,
and have the potential to provide vastly expanded programming to highly
targeted audiences. Reduction in the cost of creating additional channel
capacity could lower entry barriers for new channels and encourage the
development of increasingly specialized "niche" programming. This ability to
reach very narrowly defined audiences is expected to alter the competitive
dynamics for advertising expenditures. We are unable to predict the effect that
these or other technological changes will have on the broadcast television
industry or on the future results of our operations.

   Programming.  Competition for programming involves negotiating with national
program distributors or syndicators that sell first-run and rerun packages of
programming. Our stations compete against in-market broadcast station operators
for exclusive access to off-network reruns (such as Seinfeld) and first-run
product (such as Entertainment Tonight) in their respective markets. Cable
systems generally do not compete with local stations for programming, although
various national cable networks from time to time have acquired programs that
would have otherwise been offered to local television stations. AOL/Time
Warner, Inc., Viacom Communications, Inc. and The News Corporation Limited,
each of which has a television network, also own or control major production
studios, which are the primary source of programming for the networks. It is
uncertain whether in the future such programming, which is generally subject to
short-term agreements between the studios and the networks, will be moved to
the new networks. Television broadcasters also compete for non-network
programming unique to the markets they serve. As such, stations strive to
provide exclusive news stories, unique features such as investigative reporting
and coverage of community events and to secure broadcast rights for regional
and local sporting events.

   Advertising.  Advertising rates are based upon a number of factors including:

    .  the size of the market in which the station operates;

    .  a program's popularity among the viewers that an advertiser wishes to
       attract;

    .  the number of advertisers competing for the available time;

    .  the demographic makeup of the market served by the station;

    .  the availability of alternative advertising media in the market area;

    .  the effectiveness of the sales forces; and

    .  development of projects, features and programs that tie advertiser
       messages to programming.

   In addition to competing with other media outlets for audience share, our
stations compete for advertising revenues with:

    .  other television stations in their respective markets; and

    .  other advertising media, such as newspapers, radio stations, magazines,
       outdoor advertising, transit advertising, yellow page directories,
       direct mail, local cable systems and the Internet.

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   Competition for advertising dollars in the broadcasting industry occurs
primarily within individual markets. Generally, a television broadcasting
station in a particular market does not compete with stations in other market
areas.

Federal Regulation of Television Broadcasting

   The following is a brief discussion of certain provisions of the
Communications Act of 1934 ("Communications Act") , as amended, and the FCC's
regulations and policies that affect the business operations of television
broadcasting stations. For more information about the nature and extent of the
FCC regulation of television broadcasting stations you should refer to the
Communications Act and FCC's rules, public notices, and rulings. Over the
years, Congress and the FCC have added, amended and deleted statutory and
regulatory requirements to which station owners are subject. Some of these
changes have a minimal business impact whereas others may significantly affect
the business or operation of individual stations or the broadcast industry as a
whole. The following discussion summarizes statutory and regulatory
requirements and policies currently in effect.

   License Grant and Renewal.  Television broadcast licenses are granted for a
maximum term of eight years and are subject to renewal upon application to the
FCC. The FCC is required to grant an application for license renewal if during
the preceding term the station served the public interest, the licensee did not
commit any serious violations of the Communications Act or the FCC's rules, and
the licensee committed no other violations of the Communications Act or the
FCC's rules which, taken together, would constitute a pattern of abuse. The
vast majority of renewal applications are routinely renewed under this
standard. If a licensee fails to meet this standard the FCC may still grant
renewal on terms and conditions that it deems appropriate, including a monetary
forfeiture or renewal for a term less than the normal eight-year period.

   During certain limited periods after a renewal application is filed,
interested parties, including members of the public, may file petitions to deny
a renewal application, to which the licensee/renewal applicant is entitled to
respond. After reviewing the pleadings, if the FCC determines that there is a
substantial and material question of fact whether grant of the renewal
application would serve the public interest, the FCC is required to hold a
trial-type hearing on the issues presented. If, after the hearing, the FCC
determines that the renewal applicant has met the renewal standard the FCC must
grant the renewal application. If the licensee/renewal applicant fails to meet
the renewal standard or show that there are mitigating factors entitling it to
renewal subject to appropriate sanctions, the FCC can deny the renewal
application. In the vast majority of cases where a petition to deny is filed
against a renewal, the FCC ultimately grants the renewal without a hearing.

   No competing application for authority to operate a station and replace the
incumbent licensee may be filed against a renewal application unless the FCC
first determines that the incumbent licensee is not entitled to license renewal.

   In addition to considering rule violations in connection with a license
renewal application, the FCC may sanction a station operator for failing to
observe FCC rules and policies during the license term, including the
imposition of a monetary forfeiture.

   The FCC prohibits the assignment or the transfer of control of a
broadcasting licensee without prior FCC approval.

   Ownership Matters.  The FCC has rules which establish limits on the
ownership of broadcast stations. The ownership limits apply only to
attributable interests in a station licensee held by an individual,
corporation, partnership or other entity. In the case of corporations,
officers, directors and voting stock interests of five percent or more (twenty
percent or more in the case of qualified investment companies, such as
insurance companies and bank trust departments) are considered attributable
interests. For partnerships, all general partners and non-insulated limited
partners are attributable. Limited liability companies are treated the same as

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<PAGE>

partnerships. The FCC also considers attributable the holder of more than
thirty-three percent of a licensee's total assets (defined as total debt plus
total equity), if that person or entity also provides over fifteen percent of
the station's total weekly broadcast programming or has an attributable
interest in another media entity in the same market which is subject to the
FCC's ownership rules, such as a radio or television station, cable television
system, or daily newspaper.

   Local Ownership (Duopoly Rule).  Prior to August 1999, no party could have
attributable interests in two television stations if those stations had
overlapping service areas (which generally meant one station per market),
although the FCC did not attribute local marketing agreements involving a
second station with an overlapping service area. In August 1999, the FCC
adopted new rules which allowed the ownership of two stations in a single
market (defined using A.C. Nielsen Company's DMAs) if (1) the two stations do
not have overlapping service areas, or (2) after the combination there are at
least eight independently owned and operating full-power television stations
and one of the commonly owned stations is not ranked among the top four
stations in the DMA. The FCC will consider waivers of the rule to permit the
ownership of a second market station in cases where the second station is a
failed, failing or unbuilt. Absent these circumstances ownership of only one
television station in a market is permitted. "Satellite" stations were an
exception to the prior FCC local ownership/duopoly rules and remain an
exception under the new rules.

   The FCC now attributes and counts towards the local ownership limits another
in-market station that a station owner operates pursuant to a local marketing
agreement if it provides more than 15 percent of the second station's weekly
broadcast programming. However, local marketing agreements entered into prior
to November 5, 1996, are exempt from attribution for approximately five years
from the adoption of the revised rule (which was adopted in 1999); this
"grandfathered" period is subject to possible extension. Parties to local
marketing agreements entered into on or after November 5, 1996, that would
result in attribution of two stations in a market in violation of the ownership
limits had until August 5, 2001, to come into compliance with the new ownership
rules.

   The only market in which we currently operate stations that has the eight or
more stations that allow us to own two stations in the market is
Champaign-Springfield, Illinois. In all of the markets where we have entered
into joint sales agreements, except for one, we do not provide programming
other than news to the second station (comprising less than 15 percent of the
second station's programming) and are not therefore attributed with the second
station. In the one market where we do provide programming to the second
station, Erie, Pennsylvania, the local marketing agreement was entered into
prior to November 5, 1996. Therefore, it is exempt from the FCC's ownership
rules and we may continue to operate under the terms of that agreement until at
least the end of 2004.

   National Ownership.  There is no nationwide limit on the number of
television stations which a party may own. However, no party may have an
attributable interest in television stations which, in the aggregate, cover
more than 35.0% of all U.S. television households. In calculating the
nationwide audience coverage, the ownership of UHF stations is counted as 50.0%
of a market's percentage of the total national audience. The stations we own
have a combined national audience reach of approximately 3.0% of television
households. On February 19, 2002, the U.S. Court of Appeals for the D.C.
Circuit vacated the FCC's decision not to modify or repeal this rule and
remanded this rule to the FCC for further consideration.

   Radio/Television Cross-Ownership Rule.  The "one-to-a-market" rule limits
the common ownership or control of radio and television stations in the same
market. In August 1999, the FCC amended its rules to increase the number of
stations that may be commonly owned, subject to standards based on the number
of independently owned media voices that would remain in the market after the
combination. In markets with at least twenty independently owned media outlets,
ownership of one television station and up to seven radio stations, or two
television stations (if allowed under the television duopoly rule) and six
radio stations is permitted. If the number of independently owned media outlets
is fewer than twenty but greater than or equal to ten, ownership of one
television station (or two if allowed) and four radio stations is permitted. In
markets with

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fewer than ten independent media voices, ownership of one television station
(or two if allowed) and one radio station is permitted. In calculating the
number of independent media voices the FCC includes all radio and television
stations, independently owned cable systems (counted as one voice if cable is
generally available in the market), and independently owned daily newspapers
which have circulation that exceeds five percent of the households in the
market. When the FCC adopted the new one-to-a-market limits in August 1999, it
eliminated the waiver policy that previously applied for failed stations.

   Local Television/Cable Cross-Ownership Rule.  The FCC prohibits any cable
television system (including all parties under common control) from carrying
the signal of any television broadcast station that has a predicted service
area that overlaps, in whole or in part, the cable system's service area, if
the cable system (or any of its attributable principals) has an attributable
interest in the television station. On February 19, 2002, the U.S. Court of
Appeals for the D.C. Circuit directed the FCC to repeal this rule in its
entirety. Effective upon such repeal, cable systems and co-located television
stations may be commonly-owned.

   Local Television/Newspaper Cross-Ownership Rule.  The FCC prohibits any
party from having an attributable interest in a television station and a daily
newspaper if the television station's Grade A signal contour encompasses the
entire community in which the newspaper is published. In September, 2001, the
FCC issued a Notice of Proposed Rule Making in which the FCC proposed to
eliminate its local television/daily newspaper cross-ownership prohibition.
Comments were filed in December 2001 and reply comments were due February 15,
2002.

   Cable "Must-Carry" or Retransmission Consent Rights.  Every three years
television broadcasters are required to make an election whether they choose to
exercise their "must-carry" or retransmission consent rights in connection with
the carriage of their analog signal on cable television systems within their
DMA. The most recent election was made October 1, 1999, and is effective for
the three-year period beginning January 1, 2000. The next election date is
October 1, 2002, for the three-year period beginning January 1, 2003.

   If a broadcaster chooses to exercise its must-carry rights, it may request
cable system carriage on its over-the-air channel or another channel on which
it was carried on the cable system as of a specified date. A cable system
generally must carry the station's signal in compliance with the station's
carriage request, and in a manner that makes the signal available to all cable
subscribers. However, must-carry rights are not absolute, and whether a cable
system is required to carry the station on its system, or in the specific
manner requested, depends on variables such as the location, size and number of
activated channels of the cable system and whether the station's programming
duplicates, or substantially duplicates the programming of another station
carried on the cable system. If certain conditions are met, a cable system may
decline to carry a television station that has elected must carry status,
although it is unusual for all the required conditions to exist.

   If a broadcaster chooses to exercise its retransmission consent rights, a
cable television system which is subject to that election may not carry the
station's signal without the station's consent. This generally requires the
cable system and television station operator to negotiate the terms under which
the television station will consent to the cable system's carriage of the
station.

   In most instances, Nexstar's stations have elected to exercise their
retransmission consent rights rather than must-carry status, and have
negotiated retransmission consent agreements with cable television systems in
their markets. The terms of these agreements generally range from three to ten
years and provide for the carriage of the stations' signals. Except for WYOU,
the Bastet Group stations generally have opted for must-carry status.

   Direct-to-Home Satellite Services and Must-Carry.  In November 1999,
Congress enacted the Satellite Home Viewer Improvement Act of 1999, or SHVIA.
This statute requires providers of direct broadcast satellite services such as
Direct TV and Echostar, by January 1, 2002, to carry upon request the signals
of all local television stations in a DMA in which the satellite service
provider is carrying at least one local television station's signal. Until
January 1, 2002, satellite service providers were allowed (but not required) to
retransmit a

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<PAGE>

local station's signal within its market upon that station's consent. Satellite
providers also may provide network service from a station outside a local
market to subscribers in the market who are "unserved" by a local station
affiliated with the same network. Unserved generally refers to a satellite
subscriber who is unable, using a conventional outdoor rooftop antenna, to
receive a "Grade B" signal of a local network affiliated station. If a
subscriber is able to receive a Grade B quality signal from a local network
affiliate then, subject to certain exceptions, the subscriber is not eligible
to receive that network's programming from an out-of-market affiliate carried
on the satellite service.

   In those markets where satellite service providers have elected to provide
carriage of local television stations, such carriage has generally been limited
to the local affiliates of the major networks, including ABC, CBS, NBC and Fox.
At this time there is no satellite carriage of any of the local stations in any
market in which we operate television stations. We cannot state when or if such
carriage will commence.

   In November 2000, the FCC adopted rules implementing the requirements of
SHVIA. These include requiring commercial television stations to elect between
retransmission consent and must carry status. The first election, which was to
be made by July 1, 2001, for carriage to commence January 1, 2002, is for a
four-year period. Beginning in 2006, the cable and satellite election periods
will coincide and occur every three years. Market areas are based on Nielsen's
DMAs. Satellite carriers are not required to carry duplicative network signals
from a local market unless the stations are licensed to different communities
in different states. Satellite carriers are required to carry all local
television stations in a contiguous manner on their channel line-up and may not
discriminate in their carriage of stations.

   Digital Television.  Advanced television is a digital television, or DTV,
transmission system that delivers video and audio signals of higher quality
(including high definition television) than the existing analog transmission
system. DTV also has substantial capabilities for multiplexing (the broadcast
of several programs concurrently) and data transmission. The FCC assigned new
advanced television channels to existing broadcast stations in the first half
of 1997. For each licensed television station the FCC allocated a matching DTV
channel (which is different from the station's analog channel). In general, the
DTV channels assigned to television stations are intended to allow stations to
have their DTV coverage area replicate their analog coverage area. However,
there are a number of variables which will ultimately determine the extent to
which a station's DTV operation will provide such replication. Under certain
circumstances, a station's DTV operation may reduce its geographic coverage
area. The introduction of digital television will require consumers to purchase
new televisions that are capable of receiving and displaying DTV signals, or
adapters to receive DTV signals and convert them to an analog signal for
display on their existing receivers.

   Under current FCC guidelines, all commercial television station operators
must begin broadcasting with DTV transmission systems no later than May 1, 2002
unless an extension of time is granted. We have requested an extension of time
to begin digital operations for all of our stations, except WCIA and WCFN.
Stations affiliated with the four largest networks (ABC, CBS, NBC and Fox) in
the top 10 markets were required to begin digital broadcasting by May 1, 1999,
and in the top 30 markets by November 1, 1999. Once a station begins
broadcasting its DTV signal, it may broadcast both its analog and DTV signals
until December 31, 2006, after which, subject to certain conditions described
below, the FCC expects to reclaim one of the channels and each broadcaster will
operate a single DTV channel. Starting April 1, 2003, commercial station
operators must simulcast at least 50 percent of the video programming broadcast
on their analog channel on their DTV channel. The required simulcast percentage
increases annually until April 1, 2005, when an operator must simulcast 100
percent of its programming on its analog and DTV channels.

   Channels now used for analog broadcasts range from 2 through 69. The FCC
designated Channels 2 through 51 as the "core" channels which will be used for
DTV broadcasts. However, because of the limited number of available core DTV
channels currently available, the FCC assigned many stations DTV channels above
Channel 51 (Channels 52 through 69) for use during the transition period from
simultaneous digital and analog transmission to DTV only operation. At the end
of the transition period these stations will have to change their

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DTV operation to one of the DTV core channels. This has created three
categories of television stations with respect to their analog and DTV channel
assignments: (1) stations with both their analog and DTV channels within the
"core" channels; (2) stations with either an analog or DTV channel inside the
core and the other outside the core; and (3) stations with both their analog
and DTV channels outside the core. All of our stations currently fall within
the first or second group. We have no markets in which both our analog and DTV
channels are outside the core.

   Station operators with both their analog and DTV channels inside the core
will be required to select which of their assigned channels they will use for
permanent DTV operation before the end of the transition period. (The FCC has
not set a date for this election.) These operators may elect to continue to use
their current DTV channel or switch their DTV operation to their current analog
channel. The channel not selected for permanent DTV operation will be returned
to the FCC at the end of the transition period. Most of our stations and those
stations with which we have local marketing agreements fall in this category.
The FCC has not yet established the permanent DTV channel selection process for
stations that have one or both channels outside the DTV core channels.

   The Communications Act provides that under certain conditions the DTV
transition period may be extended beyond December 31, 2006. The transition is
to be extended in any market in which one of the following conditions is met:
(1) a station licensed to one of the four largest networks (ABC, CBS, NBC and
Fox) is not broadcasting a digital signal and that station has qualified for an
extension of the FCC's DTV construction deadline; (2) digital-to-analog
converter technology is not generally available in the market; or (3) fifteen
percent or more of the television households in the market do not subscribe to
a multichannel video programming distributor (cable, direct broadcast
satellite) that carries the digital channel of each of the television stations
in the market broadcasting a DTV channel, and do not have at least one
television receiver capable of receiving the stations' DTV broadcasts or an
analog television receiver equipped with a digital-to-analog converter capable
of receiving the stations' DTV broadcasts. We cannot predict whether conditions
will exist in any of our markets such that the DTV transition period will be
extended under any of these provisions.

   We estimate that the conversion to DTV will require an average initial
capital expenditure of approximately $250,000 per station for low-power
transmission of digital signal programming and an average additional capital
expenditure of approximately $750,000 per station to complete the roll-out to
full-power transmission of digital signal programming. In addition, for some of
our stations, we may have to undertake capital expenditures to purchase studio
and production equipment that can support digital format. We have applied for a
six-month extension regarding the May 2002 conversion deadline for all of our
stations except WCIA and WCFN, which we expect to meet the deadline.

   With respect to cable system carriage of television stations which are
broadcasting both an analog and DTV signal, such stations may choose must carry
status or retransmission consent for their analog signals, but only
retransmission consent for their digital signals. Such stations do not
presently have the right to assert must carry rights for both their analog and
DTV signals. The FCC has pending a rule making proceeding examining whether to
allow such stations to assert must carry rights for both their analog and DTV
signals, but has tentatively concluded that it will not do so. The FCC has
requested further comments on this issue in order to develop a more complete
record before issuing a final decision. If a television station operates only a
DTV signal, or returns its analog channel to the FCC and converts to digital
operations, it may assert must carry rights for its DTV signal.

   The exercise of must carry rights by a television station for its DTV signal
applies only to a single programming stream and other program-related content.
If a television station is concurrently broadcasting more than one program
stream on its DTV signal it may select which program stream is subject to its
must carry election. Cable systems are not required to carry internet,
e-commerce or other ancillary services provided over DTV signals if those
services are not related to the station's primary video programming carried on
the cable system. Digital television signals that are carried on a cable system
must be available to subscribers on the system's basic service tier.

                                      17

<PAGE>

   With respect to direct-to-the-home satellite service providers, the FCC in
November 2000 declined to address whether television stations' must carry
rights as to satellite service providers, which go into effect January 1, 2002,
will also apply to stations' DTV signals. The FCC said it would address this
issue at the same time it considers digital carriage issues for cable
television.

   Television station operators may use their DTV signals to provide ancillary
services, such as computer software distribution, internet, interactive
materials, e-commerce, paging services, audio signals, subscription video, or
data transmission services. To the extent a station provides such ancillary
services it is subject to the same regulations as are applicable to other
analogous services under the FCC's rules and policies. Commercial television
stations also are required to pay the FCC five percent of the gross revenue
derived from all ancillary services provided over their DTV signals for which a
station received a fee in exchange for the service or received compensation
from a third party in exchange for transmission of material from that third
party, not including commercial advertisements used to support broadcasting.

   Programming and Operation.  The Communications Act of 1934 requires
broadcasters to serve "the public interest." Since the late 1970s, the FCC
gradually has relaxed or eliminated many of the more formalized procedures it
had developed to promote the broadcast of certain types of programming
responsive to the needs of a station's community of license. However,
television station licensees are still required to present programming that is
responsive to community problems, needs and interests and to maintain certain
records demonstrating such responsiveness. The FCC may consider complaints from
viewers concerning programming when it evaluates a station's license renewal
application, although viewer complaints also may be filed and considered by the
FCC at any time. Stations also must follow various rules promulgated under the
Communications Act that regulate, among other things:

    .  political advertising;

    .  sponsorship identifications;

    .  contest and lottery advertising;

    .  obscene and indecent broadcasts; and

    .  technical operations, including limits on radio frequency radiation.

   In 2000, the FCC enacted new Equal Employment Opportunity rules for
broadcasters. The rules became effective, but in 2001, the U.S. Court of
Appeals for the District of Columbia Circuit declared them invalid. The FCC
suspended its rules (other than a general non-discrimination rule) and did not
appeal the Court of Appeals ruling to the U.S. Supreme Court. Other parties,
however, did appeal to the Supreme Court, and their appeal is pending. In the
meantime, the FCC has initiated a rulemaking proceeding regarding possible new
Equal Employment Opportunity rules for broadcasters.

   The Telecommunications Act of 1996 directs the FCC to establish, if the
broadcast industry does not do so on a voluntary basis, guidelines and
procedures for rating programming that contains sexual, violent, or other
indecent material. A multi-industry task force developed a ratings plan which
the FCC has ratified. The FCC also has issued rules that require television
manufacturers to install appropriate technology, such as a "V-Chip" that can
block programming based on an electronically encoded rating, to facilitate the
implementation of the ratings guidelines.

   Proposed Legislation and Regulations.  With the exception of the FCC's
ongoing rule making proceeding concerning implementation of the transition from
analog to digital television broadcasts and the FCC's proposal to eliminate the
local television/daily newspaper cross-ownership prohibition, there are no
pending rule making proceedings which are likely to have a significant impact
on the television industry or the operation of our stations. The FCC may decide
to initiate new rule making proceedings, on its own or in response to requests
from the private sector, any of which might have such an impact. However, the
FCC should shortly initiate a rulemaking proceeding to further consider the
national ownership rules. Congress also may act to amend the

                                      18

<PAGE>

Communications Act in a manner that would impact our stations or the television
broadcast industry. Other matters that could affect our broadcast properties
include technological innovations affecting the mass communications industry
such as spectrum allocation matters, including assignment by the FCC of
channels for additional broadcast stations, and FCC policies concerning low
power television stations and multichannel video program service providers,
including cable television, direct broadcast satellite and wireless cable
systems.

Employees

   As of December 31, 2001, we had a total of 1,027 employees comprised of 891
full-time and 136 part-time or temporary employees. As of December 31, 2001,
214 of our employees are covered by collective bargaining agreements. We
believe that our employee relations are satisfactory, and we have not
experienced any work stoppages at any of our facilities. However, we cannot
assure you that our collective bargaining agreements will be renewed in the
future or that we will not experience a prolonged labor dispute, which could
have a material adverse effect on our business, financial condition, or results
of operations.

Risks Related to Our Business

  Substantial Leverage--Our substantial indebtedness could adversely affect our
  financial position

   We have a significant amount of indebtedness, as set forth below.

<TABLE>
<CAPTION>
                                                      As of
                                                   December 31,
                                                       2001
                                                   ------------
                                                   (dollars in
                                                    thousands)
                <S>                                <C>
                Total indebtedness(1).............   $304,655
                Member's interest.................     82,679
                                                     --------
                Total capitalization..............   $387,344
                                                     ========
                Debt to total capitalization ratio       78.7%
</TABLE>
--------
(1) Excludes Nexstar Finance's guarantee of a $3.0 million loan for a related
    party. At December 31, 2001, there were $53.9 million of unused commitments
    under our senior credit facilities.

   Our substantial indebtedness could have important consequences. For example,
it could:

   .   limit our ability to borrow additional amounts for working capital,
       capital expenditures, acquisitions, debt service requirements, execution
       of our growth strategy or other purposes;

   .   require us to dedicate a substantial portion of our cash flow to pay
       principal and interest on our debt, which will reduce the funds
       available for working capital, capital expenditures, acquisitions and
       other general corporate purposes;

   .   limit our flexibility in planning for and reacting to changes in our
       business and in the industry in which we operate that could make us more
       vulnerable to adverse changes in general economic, industry and
       competitive conditions and adverse changes in government regulation; and

   .   place us at a disadvantage compared to our competitors that have less
       debt.

   Any of the above listed factors could materially adversely affect us.

Ability to Service Debt--To service our indebtedness, we will require a
significant amount of cash. Our ability to generate cash depends on many
factors beyond our control.

   Our ability to service our debt and to finance indebtedness when necessary
depends on our financial and operating performance, each of which is subject to
prevailing economic conditions and to financial, business, legislative and
regulatory factors as well as other factors beyond our control.

                                      19

<PAGE>

   We cannot assure you that we will generate sufficient cash flow from
operations or that we will be able to obtain sufficient funding to satisfy all
of our obligations. If we are unable to pay our debts, we will be required to
pursue one or more alternative strategies, such as selling assets, refinancing
or restructuring our indebtedness or selling additional debt or equity
securities. In addition, the ability to borrow funds under our senior credit
facilities in the future will depend on our meeting the financial covenants in
the agreements governing these facilities, including a minimum interest
coverage test and a maximum leverage ratio test. We cannot assure you that our
business will generate cash flow from operations or that future borrowings will
be available to us under our senior credit facilities, in an amount sufficient
to enable us to pay our debt or to fund other liquidity needs. As a result, we
may need to refinance all or a portion of our debt on or before maturity.
However, we cannot assure you that any alternative strategies will be feasible
at the time or prove adequate. Also, some alternative strategies will require
the consent of our lenders before we engage in those strategies.

We may not receive all available cash generated by, or be able to obtain the
assets of, stations owned by the Bastet Group.

   The Bastet Group consists of entities 100% owned by an independent third
party. Collectively, these entities own and/or operate and program the
following television stations: WYOU-TV, WFXP-TV, KJTL-TV, KJBO-TV and KODE-TV.
A member of the Bastet Group entered into a time brokerage agreement with a
subsidiary of GOCOM Holdings, LLC in December 2001 with regard to KODE, the ABC
affiliate in Joplin, Missouri, pending the acquisition of the station's assets,
which acquisition is scheduled to close on September 30, 2002. We do not own or
control the television stations owned and/or operated by the Bastet Group, but
we have entered into various management and service arrangements with them. We
also guarantee the Bastet Group's combined debt. In addition, the Bastet Group
has granted us options to purchase the stations owned by the Bastet Group. The
Bastet Group is considered a special purpose entity in accordance with
financial accounting standards. Therefore, the financial results of operations
of these entities have been consolidated with those of Nexstar in our
consolidated financial statements.

   The management and service arrangements that Nexstar has entered into with
the Bastet Group do not entitle Nexstar to all monies generated by the stations
owned and/or operated by the Bastet Group. In addition, in the event that a
bankruptcy claim were filed by or against us under the U.S. Bankruptcy Code,
Nexstar cannot assure you that it will be able to exercise the options that the
Bastet Group has granted to Nexstar to obtain the assets of the stations owned
by the Bastet Group for the benefit of Nexstar's creditors.

Possible Additional Borrowings--Despite current indebtedness levels, we may
still be able to incur more debt. This could further exacerbate the risks
described above.

   We may be able to incur additional indebtedness in the future. The terms of
the indenture governing the 12% senior subordinated notes due 2008 issued by
Nexstar Finance (the "Notes"), the indenture governing the 16% senior discount
notes due 2009 issued by Nexstar (the "Discount Notes") and the terms of the
credit agreements governing our senior credit facilities do not fully prohibit
us from doing so. At December 31, 2001 there were $53.9 million of unused
commitments under our senior credit facilities. The addition of new debt to our
current debt levels could increase the leverage-related risks described above.

Restrictive Covenants--The indenture governing the Notes, the indenture
governing the Discount Notes and the credit agreements governing our senior
credit facilities contain various covenants that limit our management's
discretion in the operation of our business.

   As more fully described in Note 9 to the financial statements located
elsewhere in this Annual Report on Form 10-K, the indenture governing the
Notes, the indenture governing the Discount Notes and the credit agreements
governing our senior credit facilities contain various provisions that limit
our management's discretion by restricting our ability to:

   .   incur additional debt and issue preferred stock;

   .   pay dividends and make other distributions;

                                      20

<PAGE>

   .   make investments and other restricted payments;

   .   enter into sale and leaseback transactions;

   .   create liens;

   .   sell assets; and

   .   enter into certain transactions with affiliates.

   These restrictions on our management's ability to operate our business in
accordance with its discretion could have a material adverse effect on our
business.

   In addition, our senior credit facilities require us to meet certain
financial ratios in order to draw funds.

   If we default under any financing agreements, our lenders could:

   .   elect to declare all amounts borrowed to be immediately due and payable,
       together with accrued and unpaid interest; and/or

   .   terminate their commitments, if any, to make further extensions of
       credit.

   If we are unable to pay our obligations to our senior secured lenders, they
could proceed against any or all of the collateral securing our indebtedness to
them. The collateral under our senior credit facilities consists of
substantially all of our existing assets. In addition, a breach of certain of
these restrictions or covenants, or an acceleration by our senior secured
lenders of our obligations to them, would cause a default under the Notes and
the Discount Notes. We may not have, or be able to obtain, sufficient funds to
make accelerated payments, including payments on the Notes or the Discount
Notes, or to repay the Notes or the Discount Notes in full after we pay our
senior secured lenders to the extent of their collateral.

Our broadcast operations could be adversely affected if we fail to renew on
favorable terms, if at all, our network affiliation agreements.

   We have six primary affiliation agreements with NBC, five with CBS, three
with ABC, two with Fox and one with UPN. Each of NBC, CBS and ABC generally
provides our stations affiliated with these networks with up to 22 hours of
prime time programming per week, while Fox and UPN each provides up to 15 hours
of prime time programming per week. With respect to our affiliation agreements
with NBC, CBS and ABC, our affiliated stations broadcast network-inserted
commercials during the programming and receive cash network compensation.
Although network affiliates generally have achieved higher ratings than
unaffiliated independent stations in the same market, we cannot assure you of
the future success of each network's programming or the continuation of that
programming. Our network affiliation agreements are subject to termination by
the networks under certain circumstances. We believe that we enjoy a good
relationship with each of NBC, CBS, ABC, Fox and UPN. However, we cannot assure
you that our affiliation agreements will be renewed or that each network will
continue to provide programming or compensation to affiliates on the same basis
as it currently provides programming or compensation. The non-renewal or
termination of a network affiliation agreement could adversely affect our
business. For information about when we must review our network affiliation
agreements, see "Business--Industry Background."

The planned industry conversion to digital television could adversely affect
our broadcast business.

   Under current FCC guidelines, all commercial television stations in the
United States must start broadcasting in digital format by May 2002 unless the
FCC grants an extension of time and must abandon the present analog format by
December 31, 2006, provided that 85% of households within the relevant DMA have
the capability to receive a digital signal. The implementation of these
regulations will expose our business to the following additional risks:

   .   It will be expensive to convert from the current analog format to
       digital format. We estimate that this conversion will require an average
       initial capital expenditure of approximately $250,000 per station for

                                      21

<PAGE>

       low-power transmission of digital signal programming and an average
       additional capital expenditure of approximately $750,000 per station to
       complete the roll-out to full-power transmission of digital signal
       programming. In addition, for some of our stations we may have to
       undertake capital expenditures to purchase studio and production
       equipment that can support digital format.

   .   The digital technology may allow us and our competitors to broadcast
       multiple channels, compared to only one today. We do not know now what
       impact this will have on the competitive landscape or on our results of
       operations.

   .   The FCC sought to replicate the coverage area of existing stations'
       analog signals when it assigned stations' digital channels. Because
       existing stations operating on very high frequency, or VHF, channels
       generally have larger geographic service areas than stations operating
       on ultra high frequency, or UHF, channels, the FCC generally made
       available to VHF stations digital channel allocations that allow higher
       power operation in order to replicate those stations' current analog
       coverage areas. In addition, to achieve a certain level of comparable
       geographic signal coverage, a station operating on a UHF channel must
       operate with considerably higher power than a station operating on a VHF
       channel. Nine of our stations including one low-power station (which may
       not be eligible for a digital channel assignment) presently operate on
       UHF channels. Eight of our stations now operate on VHF channels. Some of
       our stations which currently operate on UHF were allocated VHF digital
       channels and vice versa. The geographic coverage and power disparities
       could put us at a disadvantage to at least some of our competitors in
       certain markets. Furthermore, the higher power required to operate those
       of our analog VHF channels that were assigned UHF digital channels with
       comparable geographic signal coverage may translate into higher
       operating costs for these stations. These higher operating costs could
       have a negative effect on our results of operations.

   .   In some cases, when we convert a station to digital television, the
       signal may not be received in as large a coverage area, or it may suffer
       from additional interference. Also, the digital signal may be subject to
       reception problems to a greater degree than current analog
       transmissions. As a result, viewers using antennas located inside their
       homes, as opposed to outdoor, roof-top antennas, may not receive
       reliable signals. If viewers do not receive high-quality, reliable
       signals from our stations, our audience viewership may suffer, and in
       turn, our ability to sell time to advertisers could be impaired.

   .   The FCC is considering whether to require cable companies to carry both
       the analog and the digital signals of their local broadcasters during
       the transition period when television stations will be broadcasting
       both. The FCC stated its preliminary conclusion not to require cable
       carriage of both signals during this transition period. If the FCC does
       not require such dual carriage, cable systems in our broadcast markets
       may not carry our digital signal or our analog signal, which could
       affect us adversely.

The new federal satellite legislation could adversely affect our broadcast
business.

   The Satellite Home Viewer Improvement Act of 1999 could have an adverse
effect on our stations' audience shares and advertising revenues. This
legislation allows satellite carriers to provide, under certain circumstances,
the signals of distant stations with the same network affiliations as our
stations to more television viewers in our markets than would have been
permitted under previous law. In addition, the legislation allows satellite
carriers to provide local television signals by satellite within a station's
market, but did not require satellite carriers to carry all local stations in a
market until January 2002. To date, satellite carriers are not offering the
carriage of any local stations in any of Nexstar's markets.

We face certain other regulatory risks.

   The television broadcast industry is subject to regulation by the FCC under
the Communications Act of 1934, as amended, and, to a certain extent, by other
federal laws and state and local authorities. Proceedings to implement the
Communications Act are on-going, and we cannot predict the outcomes of these
proceedings or

                                      22

<PAGE>

their effect on our business. Approval by the FCC is required for the issuance,
renewal and assignment of station operating licenses and the transfer of
control of station licensees. In particular, our business is dependent upon our
continuing to hold television broadcast licenses from the FCC, which since
January 1997 are issued for maximum terms of eight years. Although in the vast
majority of cases the FCC renews these licenses, we cannot assure you that our
licenses will be renewed at their expiration dates. If the FCC cancels,
revokes, suspends, or fails to renew any of these licenses, it could have a
harmful effect on our business.

   Apart from the FCC, federal agencies that administer the antitrust laws also
monitor market concentrations in television, including through local marketing
agreements that are permitted by the FCC. While the stations that we currently
own and operate have already passed through necessary approvals, unfavorable
rulings in the future by these federal agencies could limit partially or
altogether our ability to create new agreements with other stations in our
markets through shared services, joint sales and/or local marketing agreements.

We face significant competition and rapidly changing technology; the
competitive landscape changes constantly.

   Generally, we compete for our audience against all the other leisure
activities in which one could choose to engage rather than watch television.
Specifically, our stations compete for audience share, programming and
advertising revenue with other television stations in their respective markets
and with other advertising media, including cable operators, new television
networks such as Paxson Communications Corporation (in which NBC has an equity
investment) and the Internet. Due to rapid technological change, the nature of
our competition, both general and specific, is continually shifting.
Competition could adversely affect our stations' future revenues and
performance.

   The markets in which we operate are in a constant state of change arising
from, among other things, technological improvements, economic and regulatory
developments as well as industry consolidation. One or more of these factors
may vary unpredictably, which could materially adversely affect our business.
We may not be able to compete effectively or adjust our contemplated plan of
development to meet changing market conditions. We are unable to predict what
forms of competition will develop in the future, the extent of that competition
or its possible effects on our businesses.

Our programming costs may increase.

   One of our most significant operating costs is syndicated programming. We
cannot assure you that we will not be exposed in the future to increased
syndicated programming costs, which may adversely affect our operating results.
Acquisition of program rights is often made two or three years in advance,
making it difficult to predict accurately how a program will perform. In some
instances, programs must be replaced before their costs have been fully
amortized, resulting in write-offs that increase station operating costs.

We are dependent upon key personnel.

   Nexstar Broadcasting believes that its success depends upon its ability to
retain the services of Perry A. Sook, its President and Chief Executive
Officer. The loss of Mr. Sook's services could adversely affect our ability to
effectively manage our overall operations or successfully execute current or
future business strategies.

   In addition, we believe that our success depends on our ability to identify,
hire and retain skilled managers and other personnel, including our present
officers and general managers. We may be unsuccessful in attracting and
retaining our personnel and this failure could materially adversely affect our
business.

We are dependent on advertising revenues which are affected by local and
national economic conditions.

   Our revenues are primarily derived from the sale of advertising time on our
stations. Our reliance on advertising revenue makes our operating results
particularly susceptible to prevailing economic conditions

                                      23

<PAGE>

because the demand for advertising time may decrease during an economic
recession or downturn. Our revenues could be adversely affected by a future
national recessionary environment and, due to the substantial portion of
revenues derived from local advertisers, our operating results in individual
markets could be adversely affected by local or regional economic downturns.

Our revenues are subject to the biennial cycle that affects the television
broadcasting industry.

   The television industry operates in a biennial cycle in which even-numbered
years tend to have higher advertising revenues than odd numbered years. Even
numbered years benefit from higher revenues associated with political
advertising, as there are congressional elections every even year, and from
Olympic Games advertising, as there is the Summer or Winter Olympic Games every
even year. Our financial results for the year ended December 31, 2001 were
affected by a general slowdown in the advertising industry, the terrorist
attack on September 11, 2001, the comparative absence of advertising revenue
for the 2000 Olympic Games and the non-recurring political advertising. Our
results in the future may continue to be affected by this biennial cycle and we
have no control over the extent to which our stations may benefit from
increased political advertising or whether our stations will be affiliated with
the networks that carry the Olympic Games programming. To a lesser extent, our
revenues may also fluctuate based on our ability to telecast high profile
sporting and entertainment events such as the Super Bowl.


                                      24

<PAGE>

ITEM 2.  PROPERTIES

   We lease our primary corporate headquarters, which are located at 200
Abington Executive Park, Suite 201, Clarks Summit, Pennsylvania 18411 and
occupy approximately 1,636 square feet. None of the individual station leases
are material to our operations, and we do not anticipate difficulty in
replacing those facilities or obtaining additional facilities, if needed.

   We lease and own facilities in the following locations:

<TABLE>
<CAPTION>
                                                             Square
                                                         Footage/Acreage
                                               Owned or    Approximate   Expiration
Station Metropolitan Area and Use               Leased        Size        of Lease
---------------------------------             ---------- --------------- -----------
<S>                                           <C>        <C>             <C>
WBRE--Wilkes Barre-Scranton, PA
  Office-Studio                               100% Owned 34,838 Sq. Ft.      --
  Office-Studio                               100% Owned 49,556 Sq. Ft.      --
  Office-Studio--Williamsport Bureau          Lease      811 Sq. Ft.     Month/Month
  Tower/Transmitter Site--Williamsport        33% Owned  1.33 Acres          --
  Tower/Transmitter Site--Sharp Mountain      33% Owned  0.23 Acres          --
  Tower/Transmitter Site--Blue Mountain       100% Owned 0.998 Acres         --
  Tower/Transmitter Site--Penobscot Mountain  100% Owned 20 Acres            --

WYOU--Wilkes Barre-Scranton, PA
  Office-Studio--News Bureau/Office           Lease      6,977 Sq. Ft.     12/1/04
  Sales Office                                Lease      800 Sq. Ft.      10/31/04
  Tower/Transmitter Site                      100% Owned 120.33 Acres        --
  Tower/Transmitter Site                      100% Owned 7.2 Acres           --
  Tower/Transmitter Site--Williamsport        33% Owned  1.33 Acres          --
  Tower/Transmitter Site--Sharp Mountain      33% Owned  0.23 Acres          --
  Tower/Transmitter Site                      Lease      10,000 Sq. Ft.  Month/Month

KTAL--Shreveport, LA
  Office-Studio                               100% Owned 2 Acres             --
  Office-Studio                               100% Owned 16,000 Sq. Ft.      --
  Office-Studio--Texarkana                    100% Owned 7,245 Sq. Ft.       --
  Office-Studio--Texarkana                    100% Owned 1.687 Acres         --
  Office-Studio--Texarkana                    Lease      2,147 Sq. Ft.     8/31/08
  Tower/Transmitter Site                      100% Owned 109 Acres           --
  Tower/Transmitter Site                      100% Owned 2,284 Sq. Ft.       --

WROC--Rochester, NY
  Office-Studio                               100% Owned 3.9 Acres           --
  Office-Studio                               100% Owned 48,000 Sq. Ft.      --
  Tower/Transmitter Site                      50% Owned  0.24 Acre           --

WCIA/WCFN--Champaign-Springfield-Decatur, IL
  Office-Studio                               100% Owned 20,000 Sq. Ft.      --
  Office-Studio                               100% Owned 1.5 Acres           --
  Office-Studio--Sales Bureau                 Lease      1,600 Sq. Ft.     1/31/12
  Office-Studio--News Bureau                  Lease      350 Sq. Ft.       9/30/02
  Office-Studio--Decatur News Bureau          Lease      300 Sq. Ft.       5/31/04
  Tower/Transmitter Site--WCIA Tower          100% Owned 38.06 Acres         --
  Tower/Transmitter Site--Springfield Tower   100% Owned 2.0 Acres           --
  Tower/Transmitter Site--Dewitt Tower        100% Owned 1.0 Acres           --

WMBD--Peoria-Bloomington, IL
  Office-Studio                               100% Owned 0.556 Acres         --
  Office-Studio                               100% Owned 18,360 Sq. Ft.      --
  Office-Studio                               Lease      1,128 Sq. Ft.     8/31/02
  Tower/Transmitter Site                      100% Owned 34.93 Acres         --
  Tower/Transmitter Site                      100% Owned 1.0 Acres           --
</TABLE>

                                      25

<PAGE>

<TABLE>
<CAPTION>
                                                        Square
                                                    Footage/Acreage
                                          Owned or    Approximate   Expiration
Station Metropolitan Area and Use          Leased        Size        of Lease
---------------------------------        ---------- --------------- -----------
<S>                                      <C>        <C>             <C>

KBTV--Beaumont-Port Arthur, TX
  Office-Studio                          100% Owned 1.2 Acres           --
  Office-Studio                          100% Owned 26,160 Sq. Ft.      --
  Office-Studio                          Leased     8,000 Sq. Ft.     9/1/09
  Tower/Transmitter Site                 100% Owned 40 Acres            --

WTWO--Terre Haute, IN
  Office-Studio                          100% Owned 4.774 Acres         --
  Office-Studio                          100% Owned 17,375 Sq. Ft.      --
  Office-Studio                          Lease      1,425 Sq. Ft.    11/30/04

WJET--Erie, PA
  Tower/Transmitter Site                 Lease      2 Sq. Ft.       Month/Month

WFXP--Erie, PA
  Tower/Transmitter Site                 Lease      1 Sq. Ft.         6/30/04

ENTERTAINMENT REALTY CORP., Erie, PA
  Office-Studio/(1)/                     100% Owned 9.87 Acres          --
  Office-Studio/(1)/                     100% Owned 15,533 Sq. Ft.      --

KFDX--Wichita Falls, TX--Lawton, OK
  Office-Studio                          100% Owned 28.06 Acres         --
  Office-Studio                          100% Owned 13,568 Sq. Ft.      --

KJTL--Wichita Falls, TX--Lawton, OK
  Office-Studio/(2)/                         --           --            --
  Tower/Transmitter Site                 Lease      40 Acres          1/30/15

KJBO-LP--Wichita Falls, TX--Lawton, OK
  Office-Studio/(2)/                         --           --            --
  Tower/Transmitter Site                 Lease      5 Acres          Year/Year

KSNF--Joplin, MO--Pittsburgh, KS
  Office-Studio                          100% Owned 13.36 Acres         --
  Office-Studio                          100% Owned 13,169 Sq. Ft.      --
  Tower/Transmitter Site                 Lease      900 Sq. Ft.       10/5/02

KMID--Midland--Odessa, TX
  Office-Studio                          100% Owned 1.127 Acres         --
  Office-Studio                          100% Owned 14,000 Sq. Ft.      --
  Tower/Transmitter Site                 100% Owned 69.87 Acres         --
  Tower/Transmitter Site                 100% Owned 0.322 Acres         --

KTAB--Abilene-Sweetwater, TX
  Office-Studio                          100% Owned 2.98 Acres          --
  Office-Studio                          100% Owned 14,532 Sq. Ft.      --
  Tower/Transmitter Site                 100% Owned 25.55 Acres         --

KQTV--St Joseph, MO
  Office-Studio                          100% Owned 3 Acres             --
  Office-Studio                          100% Owned 9,360 Sq. Ft.       --
  Tower/Transmitter Site                 100% Owned 13,169 Sq. Ft.      --

CORPORATE OFFICE--Clarks Summit, PA      Lease      1,636 Sq. Ft.    Year/Year

CORPORATE BRANCH OFFICE--Terre Haute, IN Lease      1,227 Sq. Ft.     7/31/04
</TABLE>
--------
(1) WJET and WFXP operate in facilities owned by Entertainment Realty
    Corporation, a subsidiary of Nexstar and a guarantor of the Notes. The main
    tower for WJET is at this site.
(2) The office space and studio used by KJTL and KJBO-LP is owned by KFDX.

                                      26

<PAGE>

Item 3.  Legal Proceedings

   From time to time, we are involved in litigation that arises from the
ordinary operations of our 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 4.  Submission of Matters to a Vote of Security Holders

   Neither Nexstar Finance Holdings, L.L.C. nor Nexstar Finance Holdings, Inc.
submitted any matter to a vote of its security holders during the fourth
quarter of 2001.

                                      27

<PAGE>

                                    PART II

Item 5.  Market for Common Stock and Related Stockholder Matters

Market Information

   This item is not applicable in that all of the equity securities of Nexstar
Finance Holdings, L.L.C. are owned by its immediate parent company, Nexstar
Finance Holdings II, L.L.C., and all of the equity securities of Nexstar
Finance Holdings, Inc. are owned by Nexstar Finance Holdings, L.L.C.

Item 6.  Selected Financial Data

   The selected historical consolidated financial data presented below for the
years ended December 31, 2001, 2000, 1999 and 1998 has been derived from our
audited consolidated financial statements. The selected historical combined
consolidated financial data presented below for the year ended December 31,
1997 have been derived from the audited combined financial statements of
Nexstar's predecessor entities. These entities have been presented on a
combined basis because they were under the common control of ABRY, the
principal equityholder of Nexstar Broadcasting Group until they were
reorganized into Nexstar Broadcasting Group on January 5, 1998. The following
financial data should be read in conjunction with Item 7 "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements and related notes included elsewhere in
this Annual Report on Form 10-K.

<TABLE>
<CAPTION>
                                                          Fiscal Year Ended December 31,
                                                --------------------------------------------------
                                                  2001      2000      1999      1998       1997
                                                --------  --------  --------  --------- -----------
                                                                                        Predecessor
                                                                                        -----------
<S>                                             <C>       <C>       <C>       <C>       <C>
Statement of Operations Data:                           (dollars in thousands)
Net broadcast revenue/(1)/..................... $ 99,054  $107,085  $ 78,490  $  56,005   $20,876
Trade and barter revenue.......................   11,675    10,382     8,470      6,606     2,683
                                                --------  --------  --------  ---------   -------
Total net revenue..............................  110,729   117,467    86,960     62,611    23,559
Operating costs and expenses:
  Station operating expenses...................   31,332    29,269    23,760     16,960     6,556
  Selling, general and administrative..........   28,180    28,790    23,645     15,514     9,807
  Amortization of program rights...............   17,344    16,905    13,580      8,972     3,077
  Depreciation and amortization................   33,811    23,933    20,467     21,254     5,698
                                                --------  --------  --------  ---------   -------
Income (loss) from operations..................       62    18,570     5,508       (89)    (1,579)
Interest expense...............................   38,794    20,045    16,282     11,588     2,669
Interest income................................     (316)     (309)     (261)     (136)       (37)
Other expense..................................      519       259       249        125        --
                                                --------  --------  --------  ---------   -------
Loss before income taxes and extraordinary item  (38,935)   (1,425)  (10,762)  (11,666)    (4,211)
(Provision) benefit for income taxes...........      879    (1,098)     (658)      (98)       731
                                                --------  --------  --------  ---------   -------
Loss before extraordinary item.................  (38,056)   (2,523)  (11,420)  (11,764)    (3,480)
Extraordinary item, net of income tax benefit..     (263)       --    (2,829)        --        --
                                                --------  --------  --------  ---------   -------
Net loss....................................... $(38,319) $ (2,523) $(14,249) $(11,764)   $(3,480)
                                                ========  ========  ========  =========   =======
Balance Sheet Data (end of period):
Cash and cash equivalents...................... $  5,802  $  2,750  $  2,989  $   1,964   $ 1,358
Net intangible assets..........................  313,280   220,480   199,066    146,640    41,512
Total assets...................................  426,354   318,275   287,229    209,610    66,973
Total debt/(2)/................................  304,655   253,556   203,531    140,545    35,168
Total member's interest........................   82,679    31,524    34,187     45,470    14,907
Working capital................................   17,961     5,144    (9,690)     4,843     3,911
Other Financial Data:
Capital expenditures, net...................... $  5,590  $  5,595  $  6,621  $   5,495   $   228
Cash payments for program obligations..........    8,001     8,426     6,916      4,464     1,813
Broadcast cash flow/(3)/.......................   37,383    47,592    30,244     23,285     8,803
Broadcast cash flow margin/(4)/................     37.7%     44.4%     38.5%     41.6%      42.2%
EBITDA(5)...................................... $ 34,631  $ 44,501  $ 27,583  $  21,334   $ 6,747
</TABLE>

         See notes to selected historical consolidated financial data

                                      28

<PAGE>

         NOTES TO THE SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

(1) Net broadcast revenue is defined as revenue net of agency commissions and
    excluding barter and trade.
(2) Excludes Nexstar's guarantee of a $3.0 million loan for a related party and
    includes capital leases.
(3) Broadcast cash flow ("BCF") is defined as net income before interest
    expense, income taxes, depreciation and amortization, other
    income/(expense), corporate overhead, non-cash trade and barter expenses
    and non-recurring expenses (including time brokerage agreement fees), less
    payments on program obligations and non-cash trade and barter revenue. BCF
    is not a measure of performance calculated in accordance with Generally
    Accepted Accounting Principles ("GAAP") should not be considered in
    isolation or as a substitute for net income, operating income or cash flow
    as reflected in our consolidated financial statements and is not intended
    to represent a measure of funds available for debt service, dividends,
    reinvestment or other discretionary uses. In addition, this definition of
    BCF may not be comparable to similarly titled measures reported by other
    companies. We believe that the presentation of BCF is relevant and useful
    because 1) it is a measurement utilized by industry analysts to determine a
    private market value of our television stations and 2) it is a measurement
    industry analysts utilize when determining our operating performance. See
    Item 7 "Management's Discussion and Analysis of Financial Condition and
    Results of Operations" for the calculation of BCF.
(4) BCF margin is defined as BCF divided by net broadcast revenue.
(5) EBITDA is defined as BCF less corporate expenses. We consider EBITDA to be
    an important indicator of the operational strength and performance of our
    business. EBITDA should not be considered an alternative to operating or
    net income as an indicator of our performance, or as an alternative to cash
    flows from operating activities as measures of liquidity, in each case
    determined in accordance with GAAP. In addition, this definition of EBITDA
    may not be comparable to EBITDA reported by other companies. We believe
    that the presentation of EBITDA is relevant and useful because 1) it is a
    measurement used by industry analysts to determine a private market value
    for our television stations and 2) it is a measurement industry analysts
    utilize when determining our operating performance.

Item 7.  Management's Discussion and Analysis of Financial Condition and
Results of Operations

   The following discussion and analysis should be read in conjunction with
Item 6 "Selected Financial Data" and the consolidated financial statements and
related notes included elsewhere in this Annual Report on Form 10-K. This
Annual Report on Form 10-K 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,
revenues, financial performance, liquidity and capital resources or other
financial items; any assumptions or projections about the television
broadcastings industry, any statements of our plans, strategies and objectives
for our future operations; 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," "estimate," "intend," "continue," "believe," "expect" or
"anticipate" and other similar words.

   Although we believe that the expectations reflected in any of our
forward-looking statements are reasonable, actual results could differ from
this projection or assumption in any of our forward-looking statements. Our
future financial condition and results of operations, as well as any
forward-looking statements are subject to change and inherent risks and
uncertainties discussed elsewhere in the Annual Report on Form 10-K and in our
other filings with the Securities and Exchange Commission. The forward-looking
statements made in this Annual Report on Form 10-K are made only as of the date
hereof and we do not have or undertake any obligation to publicly update any
forward-looking statements to reflect subsequent events or circumstances.

   We make references throughout our "Management's Discussion and Analysis of
Financial Condition and Results of Operations" to comparisons on a "same
station basis." These comparisons refer to stations which we have owned at the
beginning and end of a particular period. In particular, references to a
comparison on a same station basis for the year ended December 31, 2001 versus
the year ended December 31, 2000 include the following stations: WYOU, KQTV,
WTWO, WBRE, KFDX, KSNF, KBTV, WJET, WFXP, WROC, KJTL, KJBO and KTAB. References
to a comparison on a same station basis for the year ended December 31, 2000
versus the year ended December 31, 1999 include the following stations: WYOU,
KQTV, WTWO, KFDX, WBRE, KSNF, KBTV, WJET and WFXP.

                                      29

<PAGE>

Introduction

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

   The networks provide programming to our stations during various time periods
of the day. The networks compensate our stations for distributing the networks'
product over the air and for keeping a portion of advertising inventory during
those time periods. Each station purchases licenses to broadcast programming in
non-news time periods during the remainder of the day. The licenses are either
purchased from a syndicator for cash or the syndicator is allowed to retain
some of the inventory as compensation to eliminate or reduce the cash cost for
the license. The station records the estimated fair market value of the
inventory given to the syndicator as a barter asset and liability. Over the
term of the contract, these values are amortized as barter revenue and expense.

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

   Most advertising contracts are short-term and generally run for a few weeks.
Excluding political revenue, 62.5% and 61.9% of our spot revenue for the years
ended December 31, 2001 and December 31, 2000, respectively, was generated from
local advertising which is sold by a station's sales staff. The remainder of
our advertising revenue represents inventory sold for national or political
advertising. Each station has an agreement with a national representative firm
that normally provides for representation outside the particular station's
market. National commission rates vary within the industry but are governed by
each station's agreement. All national and political revenue is placed by
advertising agencies. The agencies receive a commission rate of 15.0% for the
gross amount of advertising schedules placed by them.

   While the majority of local spot revenue is placed by local agencies, some
advertisers place their schedules directly with the local sales staff, thereby
eliminating the agency commission.

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

   We define broadcast cash flow, or BCF, as net income before interest
expense, income taxes, depreciation, amortization, other income/(expenses),
corporate overhead, non-cash trade and barter expenses and time brokerage fees
less payments on program obligations and non-cash trade and barter revenue.
Other television broadcasting companies may measure BCF in a different manner.
We have included BCF data because such data is commonly used as a measure of
performance for broadcast companies and is also used by industry analysts to
determine a private market value for our television stations. BCF should not be
used as an indicator or alternative to operating income, net income or cash
flow as reflected in our consolidated financial statements, is not intended to
represent

                                      30

<PAGE>

funds available for debt service, dividends, reinvestment or other
discretionary uses, is not a measure of financial performance under Generally
Accepted Accounting Principles, or GAAP, and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with GAAP.

   Our acquisitions and other arrangements during each of the fiscal years
ended December 31, 2001, 2000 and 1999 affect the year-to-year comparability of
the operating results discussed below. In 2001, Nexstar entered into an
outsourcing agreement with a subsidiary of Sinclair Broadcast Group, Inc. to
provide certain engineering, production, sales and administrative services for
WYZZ, the Fox affiliate in the Peoria-Bloomington, Illinois market. A member of
the Bastet Group entered into a time brokerage agreement with a subsidiary of
GOCOM Holdings, L.L.C. in December 2001 with regard to KODE, the ABC affiliate
in Joplin, Missouri, pending the acquisition of the station's assets for $14.0
million. In 2000, Nexstar acquired substantially all of the assets of KMID, the
ABC affiliate in Midland-Odessa, Texas, for approximately $10.0 million and
substantially all of the assets of KTAL, the NBC affiliate in Shreveport,
Louisiana, for approximately $35.3 million. In 1999, Nexstar acquired
substantially all of the assets of WROC, the CBS affiliate in Rochester, New
York, for approximately $46.0 million and the assets of KTAB, the CBS affiliate
in Abilene-Sweetwater, Texas, for approximately $17.3 million. Nexstar also
entered into a time brokerage agreement with WCIA/WCFN and WMBD during 1999,
and, as discussed below, acquired substantially all of the assets of these
stations in 2001. Also in 1999, the Bastet Group acquired substantially all of
the assets of KJTL, the Fox affiliate in Wichita Falls, Texas-Lawton, Oklahoma,
and KJBO-LP, the UPN affiliate in Wichita Falls, Texas-Lawton, Oklahoma, for
approximately $15.5 million.

Recent Developments

Acquisitions and Station Agreements

   On January 12, 2001, Nexstar acquired substantially all of the assets of
WCIA/WCFN and WMBD for approximately $108.0 million. WCIA/WCFN is the CBS
affiliate in the Champaign-Springfield-Decatur, Illinois market, and WMBD is
the CBS affiliate in the Peoria-Bloomington, Illinois market. We financed the
purchase of WCIA/WCFN and WMBD with the proceeds of (1) our existing $275.0
million senior credit facilities, (2) Nexstar's $40.0 million unsecured interim
loan, the proceeds of which were contributed to Nexstar Finance, and (3) $65.0
million of equity contributed by our parent, Nexstar Finance Holdings II,
L.L.C. (then known as Nexstar Finance Holdings, L.L.C.).

   A member of the Bastet Group entered into a time brokerage agreement with a
subsidiary of GOCOM Holdings, L.L.C. in December 2001 with regard to KODE, the
ABC affiliate in Joplin, Missouri, pending the acquisition of the station's
assets, which is scheduled to close on September 30, 2002. The purchase price
of the assets is $14.0 million and will be financed under the Bastet Group's
senior credit facility. Pursuant to the terms of the agreement, Mission
Broadcasting of Joplin, Inc. has made a down payment of $6.0 million against
the purchase price to GOCOM Holdings, L.L.C., which is reflected in other
assets in the consolidated financial statements. Effective December 1, 2001,
Nexstar entered into an outsourcing agreement with a subsidiary of Sinclair
Broadcasting Group, Inc. to provide certain engineering, production, sales and
administrative services for WYZZ, the Fox affiliate in the Peoria-Bloomington,
Illinois market. The parties will share in the combined broadcast cash flow
generated by WYZZ and, Nexstar-owned, WMBD.

Senior Subordinated Notes

   On March 16, 2001, Nexstar Finance completed the sale of $160.0 million
aggregate principal amount of 12% Senior Subordinated Notes due 2008 (the
"Notes") at a price of 96.012%. The Notes mature on April 1, 2008. The Notes
are unconditionally guaranteed by each of Nexstar Finance's existing and future
domestic subsidiaries and by the Bastet Group. The proceeds from the sale of
the Notes were used to (1) repay $30.0 million of the unsecured interim loan,
(2) repay $116.2 million of Nexstar's reducing revolving credit facility and
(3) pay fees and expenses of the financing.

                                      31

<PAGE>

Senior Discount Notes

   On May 17, 2001, Nexstar completed the sale of $36.988 million aggregate
principal amount at maturity of Senior Discount Notes due 2009 (the "Discount
Notes") at a price of 54.0373%. The Discount Notes mature on May 15, 2009. Each
Discount Note will have an accreted value at maturity of $1,000. The Discount
Notes will not begin to accrue cash interest until May 15, 2005 with payments
to be made every six months in an arrears on May 15 and November 15. The
Discount Notes are general unsecured senior obligations effectively
subordinated to all of our senior secured debt and are structurally
subordinated to the Notes described above.

Reorganization

   As required by the terms of the indenture governing the Discount Notes, on
August 6, 2001, pursuant to an assignment and assumption agreement, the entity
formerly known as Nexstar Finance Holdings, L.L.C. contributed all of the
equity interests of Nexstar Finance, L.L.C. (a 100% wholly owned subsidiary of
the entity formerly known as Nexstar Finance Holdings, L.L.C.) and all shares
of common stock of Nexstar Finance, Inc. (also a 100% wholly-owned subsidiary
of the entity formerly known as Nexstar Finance Holdings, L.L.C.) to a newly
created wholly-owned subsidiary of the entity formerly known as Nexstar Finance
Holdings, L.L.C., NBG, L.L.C. As a result of this transaction, all of the net
assets of the entity formerly known as Nexstar Finance Holdings, L.L.C. were
transferred to NBG, L.L.C. with the exception of an intercompany note payable
to Nexstar Broadcasting Group, L.L.C. (the ultimate parent company of the
entity formerly known as Nexstar Finance Holdings, L.L.C.) of $31.6 million
plus accrued interest. Simultaneous with this reorganization, the entity
formerly known as Nexstar Finance Holdings, L.L.C. was renamed Nexstar Finance
Holdings II, L.L.C. and NBG, L.L.C. was renamed Nexstar Finance Holdings,
L.L.C. In addition, upon completion of this reorganization, Nexstar
Broadcasting Group, L.L.C.'s guaranty of the Discount Notes was released and
all obligations of Nexstar Broadcasting Group, L.L.C. under the indenture
governing the Discount Notes ceased to be effective.

   The reorganization has been accounted for in a manner similar to a pooling
of interests and, accordingly, the financial information for Nexstar Finance
Holdings, L.L.C. (formerly NBG, L.L.C.) for all periods has been revised to
reflect the reorganization.

Capital Contributions

   On January 12, 2001, we received $65.0 million in capital contributions from
Nexstar Finance Holdings II, L.L.C. (known then as Nexstar Finance Holdings,
L.L.C). On May 17, 2001, concurrent with the sale of the Discount Notes, $8.0
million was distributed back to Nexstar Finance Holdings L.L.C. and $1.25
million was received in capital contributions. On August 7, 2001 and on
November 14, 2001, we received $20.0 million and $15.0 million, respectively,
in capital contributions from Nexstar Finance Holdings II, L.L.C. The proceeds
from both capital contributions were used to reduce bank debt.

                                      32

<PAGE>

Historical Performance

  Revenues

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

<TABLE>
<CAPTION>
                                                               Year Ended December 31,
                                                     -------------------------------------------
                                                          2001           2000          1999
                                                     -------------- -------------- -------------
                                                      Amount    %    Amount    %   Amount    %
                                                     -------- ----- -------- ----- ------- -----
                                                               (dollars in thousands)
<S>                                                  <C>      <C>   <C>      <C>   <C>     <C>
Local............................................... $ 64,097  56.0 $ 62,595  50.2 $49,953  54.9
National............................................   38,456  33.6   38,602  31.0  32,212  35.3
Political...........................................    2,197   1.9   15,126  12.1   1,703   1.9
Network compensation................................    7,454   6.5    6,258   5.0   5,440   6.0
Other...............................................    2,270   2.0    2,050   1.7   1,751   1.9
                                                     -------- ----- -------- ----- ------- -----
   Total gross revenue..............................  114,474 100.0  124,631 100.0  91,059 100.0
Less: Agency and national representative commissions   15,420  13.5   17,546  14.1  12,569  13.8
                                                     -------- ----- -------- ----- ------- -----
   Net broadcast revenue............................   99,054  86.5  107,085  85.9  78,490  86.2
Trade and barter....................................   11,675         10,382         8,470
                                                     --------       --------       -------
Total net revenue................................... $110,729       $117,467       $86,960
                                                     ========       ========       =======
</TABLE>

  Results of Operations

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

<TABLE>
<CAPTION>
                                                                     Year Ended December 31,
                                                           -------------------------------------------
                                                                2001           2000          1999
                                                           -------------- -------------- -------------
                                                            Amount    %    Amount    %   Amount    %
                                                           -------- ----- -------- ----- ------- -----
                                                                     (dollars in thousands)
<S>                                                        <C>      <C>   <C>      <C>   <C>     <C>
Total net revenue......................................... $110,729 100.0 $117,467 100.0 $86,960 100.0
Operating expenses:
   Station operating......................................   28,635  25.9   27,591  23.5  21,824  25.1
   Selling, general and administrative....................   28,180  25.4   28,790  24.5  23,645  27.2
   Trade and barter.......................................   11,713  10.6   10,227   8.7   8,311   9.6
   Depreciation and amortization..........................   33,811  30.5   23,933  20.4  20,467  23.5
   Amortization of program license rights, net of barter..    8,328   7.6    8,356   7.1   7,205   8.3
                                                           --------       --------       -------
Operating income.......................................... $     62       $ 18,570       $ 5,508
                                                           ========       ========       =======
</TABLE>

  Broadcast Cash Flow

   The following table sets forth certain operating data for the periods
indicated. Please refer to the "Liquidity and Capital Resources" section for a
discussion of operating cash flows.

<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                                                      -------------------------
                                                       2001     2000     1999
                                                      -------  -------  -------
                                                        (dollars in thousands)
<S>                                                   <C>      <C>      <C>
Operating income..................................... $    62  $18,570  $ 5,508
Add:
Amortization of program license rights, net of barter   8,328    8,356    7,205
Depreciation and amortization........................  33,811   23,933   20,467
Corporate expenses/(1)/..............................   2,752    3,091    2,661
Non-recurring license and marketing agreement fees...      77    1,914    1,216
Trade and barter expense.............................  11,713   10,227    8,311
Interest income......................................     316      309      262
Less:
Trade and barter revenue.............................  11,675   10,382    8,470
Payments for program license liabilities.............   8,001    8,426    6,916
                                                      -------  -------  -------
Broadcast cash flow.................................. $37,383  $47,592  $30,244
                                                      =======  =======  =======
Broadcast cash flow margin/(2)/......................    37.7%    44.4%    38.5%
</TABLE>
--------
(1) Corporate expenses represent costs associated with the centralized
    management of our stations.
(2) Broadcast cash flow margin is defined as broadcast cash flow divided by net
    broadcast revenue.

                                      33

<PAGE>

  Year Ended December 31, 2001 Compared to Year Ended December 31, 2000.

   Net broadcast revenue for the year ended December 31, 2001 was $99.1
million, a decrease of $8.0 million, compared to $107.1 million for the year
ended December 31, 2000. An increase of approximately $2.9 million was
attributable to stations acquired after January 1, 2000. On a same station
basis, net broadcast revenue for the year ended December 31, 2001 was $71.8
million as compared to $82.7 million for December 31, 2000, a 13.2% decrease.
Of this decrease, $1.5 million was attributable to local revenue, $1.5 million
was due to a decline in national revenue and $8.5 million was non-recurring
political revenue partially offset by increases in other broadcast revenue for
the year. A general slowdown in the advertising industry, the terrorist attack
on September 11, 2001, the comparative absence of advertising revenue from the
2000 Olympic games and the non-recurring political advertising are the primary
components of the decrease in broadcast revenue. After the terrorist attack,
the networks aired twenty-four hour newscasts with no commercial breaks for
several days. The unscheduled newscasts and absence of commercial breaks
resulted in a loss of approximately $1.1 million in net broadcast revenue for
our stations.

   Operating expenses, including selling, general and administrative expenses
and corporate overhead, net of trade, for the year ended December 31, 2001 were
$56.8 million, compared to $56.4 million for the year ended December 31, 2000,
an increase of $0.4 million. An increase of approximately $1.6 million was
attributable to stations acquired after January 1, 2000. On a same station
basis, operating expenses for the year ended December 31, 2001 were $40.8
million as compared to $42.0 million for the year ended December 31, 2000, a
2.9% decline. Cost controls implemented at the stations accounted for this
decrease. Cost controls included a reduction in work force and the related
personnel costs, strict controls on overtime and a decrease in promotional
costs.

   Amortization of program license rights, net of barter, for the year ended
December 31, 2001 was $8.3 million, compared to $8.4 million for the year ended
December 31, 2000. An increase of $0.5 million was attributable to the stations
acquired in 2000 and 2001, offset by a decrease of $0.6 million as a result of
lower contract costs from favorable negotiations on programming contracts.
Depreciation of property and equipment and amortization of intangibles was
$33.8 million for the year ended December 31, 2001, compared with $23.9 million
for the comparable period in 2000, an increase of $9.9 million. The increase of
$9.9 million was attributable to the effect of the stations acquired in 2000
and 2001.

   Operating income for the year ended December 31, 2001 was $0.1 million as
compared to $18.6 million for the year ended December 31, 2000, a decrease of
$18.5 million. Of the $18.5 million decrease, approximately $12.1 million was
attributable to stations acquired after January 1, 2000. On a same station
basis, operating income for the year ended December 31, 2001 was $2.9 million
as compared to $9.3 million for the year ended December 31, 2000. The decrease
was primarily attributable to lower net revenues, partially offset by the cost
controls described above.

   Interest expense, including amortization of debt financing costs, for the
year ended December 31, 2001 was $38.8 million, compared to $20.0 million for
the same period in 2000, an increase of $18.8 million. The increase was
primarily attributable to the full year effect of the additional indebtedness
to acquire the stations in 2000 and 2001, amortization of debt financing costs
related to interim financing and an increase in the cost of funds.

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

   As a result of the factors discussed above, our net loss was $38.3 million
for the year ended December 31, 2001, compared to a net loss of $2.5 million
for the same period in 2000, an increase in net loss of $35.8 million.

   Broadcast cash flow for the year ended December 31, 2001 was $37.4 million,
compared with $47.6 million for the year ended December 31, 2000, a decrease of
$10.2 million. Of the $10.2 million decrease, approximately $0.9 million was
attributable to stations acquired after January 1, 2000. On a same station
basis, broadcast cash

                                      34

<PAGE>

flow for the year ended December 31, 2001 was $28.5 million as compared to
$37.8 million for the year ended December 31, 2000, a 24.6% decrease. Broadcast
cash flow margins for the year ended December 31, 2001 decreased to 37.7% from
44.4% in 2000. The decrease in broadcast flow and broadcast cash flow margins
were attributable to lower net revenues as described above. The margins were
directly affected by the lower revenues due to the non-variable nature of
operating costs at a television station. The operating expenses, except for
sales commissions and incentives, remain relatively stable regardless of the
change in revenue. We expect to continue to have higher margins during the even
numbered years as a result of advertising revenue associated with the Olympic
games and political campaigns and lower margins in during the odd numbered
years without Olympic games and nominal political activity.

  Year Ended December 31, 2000 Compared to Year Ended December 31, 1999.

   Net broadcast revenue for the year ended December 31, 2000 was $107.1
million, an increase of $28.6 million, compared to $78.5 million for the year
ended December 31, 1999. Of the $28.6 million increase, approximately $20.9
million was attributable to stations acquired after January 1, 1999. On a same
station basis, net broadcast revenue for the year ended December 31, 2000 was
$65.5 million as compared to $57.8 million for December 31, 1999, a 13.3%
increase. Most of this increase was attributed to increased political
advertising as 2000 had a close presidential election, congressional elections
and senatorial elections in Missouri, Texas, Indiana, Pennsylvania and New
York, while 1999 had only state and local elections. Local and national
revenues were relatively flat as the increased demand for political advertising
crowded out local and national advertisers. The increased pressure on inventory
during the months nearest the November election resulted in increased rates and
the amount of inventory sold in each time period. Local and national revenues
for our NBC affiliates benefited from the Olympic Games.

   Operating expenses, including selling, general and administrative expenses
and corporate overhead, net of trade, for the year ended December 31, 2000 were
$56.4 million, compared to $45.5 million for the year ended December 31, 1999,
an increase of $10.9 million. Of this $10.9 million net increase, approximately
$11.6 million was attributable to stations acquired after January 1, 1999. On a
same station basis, operating expenses for the year ended December 31, 2000
were $31.8 million as compared to $32.5 million for the year ended December 31,
1999, a 2.2% decline. Cost controls implemented at the stations accounted for
this decrease.

   Amortization of program license rights, net of barter, for the year ended
December 31, 2000 was $8.4 million, compared to $7.2 million for the year ended
December 31, 1999, an increase of $1.2 million. The increase of $1.2 million
was attributable to the stations acquired in 1999 and 2000. Depreciation of
property and equipment and amortization of intangibles was $23.9 million for
the year ended December 31, 2000, compared with $20.5 million for the
comparable period in 1999, an increase of $3.4 million. The increase of $3.4
million was attributable to the effect of the stations acquired in 1999 and
2000.

   Operating income for the year ended December 31, 2000 was $18.6 million as
compared to $5.5 million for the year ended December 31, 1999, an increase of
$13.1 million. Of the $13.1 million increase, approximately $6.8 million was
attributable to stations acquired after January 1, 1999. On a same station
basis, operating income for the year ended December 31, 2000 was $10.3 million
as compared to $4.0 million for the year ended December 31, 1999. The increase
was primarily attributable to internal revenue growth.

   Interest expense for the year ended December 31, 2000 was $20.0 million,
compared to $16.3 million for the same period in 1999, including amortization
of debt financing costs, an increase of $3.7 million. The increase was
primarily attributable to the full year effect of the additional indebtedness
to acquire the stations in 1999 and 2000.

   In 1999, we wrote off $2.8 million of debt financing costs, net of the tax
effect, as a result of refinancing our senior credit facilities during the year
ended 1999.

                                      35

<PAGE>

   As a result of the factors discussed above, our net loss was $2.5 million
for the year ended December 31, 2000, compared to a net loss of $14.2 million
for the same period in 1999, a decrease in net loss of $11.7 million.

   Broadcast cash flow for the year ended December 31, 2000 was $47.6 million,
compared with $30.2 million for the year ended December 31, 1999, an increase
of $17.4 million. Of the $17.4 million increase, approximately $9.1 million was
attributable to stations acquired after January 1, 1999. On a same station
basis, broadcast cash flow for the year ended December 31, 2000 was $31.9
million as compared to $23.6 million for the year ended December 31, 1999, a
35.1% increase. Broadcast cash flow margins for the year ended December 31,
2000 increased to 44.4% from 38.5% in 1999. The increase in broadcast cash flow
and broadcast cash flow margins was attributable to an increase in net
broadcast revenue and lower operating costs on a same station basis.

Liquidity and Capital Resources

   As of December 31, 2001, cash and cash equivalents were $5.8 million
compared to $2.8 million as of December 31, 2000.

   Our primary sources of liquidity are cash flows from operating activities
and the senior credit facilities. Cash flows provided by operating activities
were $2.0 million for the year ended December 31, 2001, as compared to $16.6
million for the year ended December 31, 2000. A decrease in demand for
advertising time would reduce the availability of funds from operating
activities.

   Cash used for investing activities was $139.1 million for the year ended
December 31, 2001, as compared to $52.1 million for the year ended December 31,
2000. Cash used for investing activities for the year ended December 31, 2001
was the result of an outlay of approximately $108.0 million for the purchase of
WCIA and WMBD, a down payment of $6.0 million for the future acquisition of
KODE, transaction and financing costs of approximately $19.4 million and
ongoing capital expenditures of $5.7 million, compared to $45.3 million for the
purchase of KMID and KTAL, transaction costs of approximately $1.1 million and
capital expenditures of $5.7 million during 2000.  We expect capital
expenditures for 2002 to approximate $7.0 million, partially as a result of
converting some of our stations to a low-power digital television transmission
system. We estimate that the conversion will require approximately $250,000 per
station. Nine of our stations are scheduled to complete the conversion in 2002
with the remaining station conversions and related expenditures to occur in
2003.

   Cash flows from financing activities were $140.2 million for the year ended
December 31, 2001, compared to $35.3 million for the year ended December 31,
2000. The change in cash flows from financing activities for the year ended
December 31, 2001 was the result of (1) borrowings under the new senior credit
facilities of $278.8 million with a subsequent borrowing and repayment of
$160.1 million as a result of the amendment on June 14, 2001 on the credit
agreement governing our senior credit facilities to allow for a $50.0 Term A
facility, a $75.0 million Term B facility and a $100.0 million revolving
facility, (2) borrowings of $153.6 million evidenced by the senior subordinated
notes (3) borrowing and subsequent repayment of a $40.0 million interim loan
(4) borrowings of $18.7 million evidenced by the senior discount notes, (5)
additional equity proceeds of $93.3 million (net of an $8.0 million
distribution) and (6) borrowing of $12.0 million less a repayment of $6.0
million to fund a deposit on the acquisition of KODE less the repayment of the
existing senior credit facility. As of December 31, 2001, $53.9 million of the
revolving credit facility is available for use.

   As of December 31, 2000, cash and cash equivalents were $2.8 million,
compared to $3.0 million as of December 31, 1999.

   Cash flows from operating activities were $16.6 million for the year ended
December 31, 2000, compared to $9.7 million for the year ended December 31,
1999. Changes in our net cash flows from operating activities are primarily the
result of higher broadcast cash flows offset by increases in working capital
needs.

   Cash used for investing activities was $52.1 million for the year ended
December 31, 2000, as compared to $89.0 million for the year ended December 31,
1999. Cash used for investing activities for the year ended December 31, 2000
was the result of an outlay of approximately $10.0 million for the purchase of
KMID and

                                      36

<PAGE>

approximately $35.3 million for the purchase of KTAL and the related
transaction costs, as well as ongoing capital expenditures at the stations. Our
capital expenditures were $5.7 million for the year ended December 31, 2000 and
$6.6 million for the year ended December 31, 1999.

   Cash flows from financing activities were $35.3 million for the year ended
December 31, 2000, as compared to $80.3 million for the year ended December 31,
1999. The change in cash flows from financing activities for the year ended
December 31, 2000 was the result of fewer acquisitions and principal payments.

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

  Senior Credit Facilities

   On January 12, 2001, Nexstar and the Bastet Group each entered into a senior
secured credit facility with a group of commercial banks. The terms of the
credit agreement governing the Nexstar facility provide for a reducing
revolving credit facility in the amount of $72.0 million and a term loan
facility in the amount of $110.0 million. The Nexstar facility was subsequently
amended on June 14, 2001, to allow for a $50.0 million term loan facility,
which is Term A facility, a $75.0 million term loan facility, which is Term B
facility and a $57.0 million reducing revolving facility. On November 14, 2001,
the credit facility was amended to adjust financial covenants effective
September 30, 2001 and future periods and to reduce the revolving facility to
$42.0 million. Prepayments have been made under the Term A facility,
effectively reducing the commitment to $32.0 million.

   The terms of the credit agreement governing the Bastet Group facility
provide for a revolving credit facility in the amount of $43.0 million. On
November 14, 2001, the credit facility was amended to increase the revolving
facility to $58.0 million. Interest rates associated with the Nexstar and the
Bastet Group credit facilities are based, at our option, on the prevailing
prime rate plus an applicable margin or the LIBOR rate plus an applicable
margin. Interest is fixed for a period ranging from one month to 12 months,
depending on availability of the interest basis selected, except if we select a
prime-based loan, in which case the interest rate will fluctuate during the
period as the prime rate fluctuates. Interest is payable periodically based on
the type of interest rate selected.

   In addition, Nexstar and the Bastet Group are required to pay quarterly
commitment fees based on our consolidated total leverage ratio for that
particular quarter on the unused portion of the revolving commitments. The
reducing revolving credit facility and the term loans are subject to
amortization schedules. The revolving facilities and the Term A facility are
due and payable on, January 12, 2007, while the maturity date of the Term B
facility is July 12, 2007. The senior credit facilities contain covenants which
require us to comply with certain limitations on the incurrence of additional
indebtedness, issuance of equity, payment of dividends and on certain other
business activities. We were in compliance with all covenants contained in the
credit agreement governing our senior credit facilities at December 31, 2001.

  Senior Subordinated Notes

   On March 16, 2001, Nexstar Finance issued $160.0 million of 12% Senior
Subordinated Notes (the "Notes") at a price of 96.012%. The Notes mature on
April 1, 2008. Interest is payable every six months in arrears on April 1 and
October 1. The Notes are guaranteed by all of our domestic existing and future
restricted subsidiaries. They are general unsecured senior subordinated
obligations subordinated to all of our senior debt. The Notes are redeemable on
or after April 1, 2005 and Nexstar may redeem up to 35.0% of the aggregate
principal amount of the notes before April 1, 2004 with the net cash proceeds
from qualified equity offerings. The indenture governing the Notes contains
covenants which require the Nexstar to comply with certain limitations on the
incurrence of additional indebtedness, issuance of equity, payment of dividends
and on certain other business activities. We were in compliance with all
covenants contained in the indenture governing the Notes at December 31, 2001.

                                      37

<PAGE>

  Senior Discount Notes

   On May 17, 2001, we issued $36.988 million principal amount at maturity of
Senior Discount Notes (the "Discount Notes") at a price of 54.0373%. The
Discount Notes mature on May 15, 2009. Each Discount Note will have an accreted
value at maturity of $1,000. The Discount Notes will not begin to accrue cash
interest until May 15, 2005 with payments to be made every six months in
arrears on May 15 and November 15. The Discount Notes are general unsecured
senior obligations effectively subordinated to all of our senior secured debt
and structurally subordinated to the Notes described above. The Discount Notes
contain covenants, which require us to comply with certain limitations on the
incurrence of additional indebtedness, issuance of equity, payment of dividends
and on certain other business activities. We were in compliance with all
covenants contained in the indenture governing the Discount Notes at December
31, 2001.

  Registration

   In September 2001 and January 2002, we registered our Notes and Discount
Notes, respectively, under the Securities Act of 1933 pursuant to a
registration rights agreement.

  Unsecured Interim Loan

   On January 12, 2001, we were issued an unsecured interim loan by our primary
lender in the amount of $40.0 million. The interim loan had an initial interest
rate of 13.5% per year, which automatically increased by 0.5% on each
three-month anniversary of the closing date, not to exceed 18.0% per year.
Interest was payable quarterly in arrears until maturity, commencing after
January 12, 2005. The interim loan had a maturity date of January 12, 2008. The
interim loan was effectively subordinate to the prior payment in full of all
senior debt either outstanding or to be created, incurred, assumed or
guaranteed. In conjunction with the offering of the Notes, $30.0 million of the
interim loan was repaid. The remaining $11.2 million (including accrued
interest) was repaid with proceeds from the offering of the Discount Notes.

  Digital Conversion

   FCC regulations require us to commence digital operations by May 1, 2002, in
addition to continuing our analog operations, unless an extension of time is
granted. We have requested an extension of time to begin digital operations at
all of the stations except WCIA and WCFN, which are scheduled to meet the
deadline. Although there can be no assurance that the FCC will so act, we
anticipate that the FCC will grant the extensions. We estimate the digital
conversion will require an average initial capital investment of $250,000 per
station for low-power transmission of digital signal programming and an average
additional capital expenditure of $750,000 per station for full-power
transmission modifications. Except for the capital invested in WCFN to make it
a full-power broadcasting station there were no expenditures for digital
conversion in 2001. We anticipate that digital expenditures will be funded
through available cash on hand and cash generated from operations.

  Off-Balance Sheet Arrangements

   At December 31, 2001 and 2000, we did not have any relationships with
unconsolidated entities or financial partnerships, such as entities often
referred to as structured finance or special purpose 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.

                                      38

<PAGE>

  Contractual Obligations

   The following summarizes our contractual obligations at December 31, 2001,
and the effect such obligations are expected to have on our liquidity and cash
flow in future periods.

<TABLE>
<CAPTION>
                                           Total    2002   2003-2004 2005-2006 Thereafter
                                          -------- ------- --------- --------- ----------
                                                      (dollars in thousands)
<S>                                       <C>      <C>     <C>       <C>       <C>
   Senior credit facility................ $128,143 $   488  $ 6,411   $11,739   $109,505
   Senior subordinated debt..............  160,000      --       --        --    160,000
   Senior discount notes.................   36,988      --       --        --     36,988
   Broadcast rights current commitments..    7,957   5,572    1,105       572        708
   Broadcast rights future commitments...   11,670   3,800    6,985       885         --
   Executive employment contracts........    2,397     895    1,502        --         --
   Capital lease payments................       23      23       --        --         --
   KODE purchase price obligation........    8,000   8,000       --        --         --
   TBA and other outsourcing agreements..      315     315       --        --         --
   Operating lease obligations...........    2,089     441      780       420        448
                                          -------- -------  -------   -------   --------
   Total contractual cash obligations.... $357,582 $19,534  $16,783   $13,616   $307,649
                                          ======== =======  =======   =======   ========
</TABLE>

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

   We believe that our available cash and anticipated cash flow from operations
will be sufficient to fund our working capital and capital expenditure
requirements for at least the next twelve months.

Critical Accounting Policies and Estimates

   The preparation of consolidated financial statements required us to make
estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosures of contingent
liabilities. On an ongoing basis, we evaluate our estimates, including those
related to intangible assets, bad debts, program rights, 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 these estimates under
different assumptions or conditions. We believe that the following critical
accounting policies affect our more significant judgments and estimates used in
the preparation of our consolidated financial statements.

   We have significant goodwill and intangible assets on our balance sheet. If
the value of these assets was impaired by some factor, such as the loss of a
network affiliation or an adverse change in the advertising marketplace, we may
be required to record an impairment charge.

   We maintain allowances for doubtful accounts for estimated losses resulting
from the inability of our customers to make required payments. If the financial
condition of our customers were to deteriorate, resulting in an impairment of
their ability to make payments, additional allowances may be required.

   Broadcast rights, primarily in the form of syndicated programs and feature
film packages, are initially recorded at the amount paid or payable to program
suppliers for the limited right to broadcast the suppliers' programming and are
recorded when available for use. Broadcast rights are stated at the lower of
unamortized cost or net realizable value. Amortization is computed using the
straight-line method based on the license period or usage, whichever is
greater. The current portion of broadcast rights represents those rights
available for broadcast which will be amortized in the succeeding year. We
charge program rights to operations over the estimated broadcast period. If the
expected broadcast period was shortened or cancelled due, for example, to poor
ratings, we would be required to write-off the remaining value of the related
program rights to operations on an accelerated basis or possibly immediately.

                                      39

<PAGE>

   We barter advertising time for certain programming. These transactions are
recorded at our estimate of the value of the advertising time exchanged, which
approximates the fair value of the programming received. The value of
advertising time exchanged is estimated by applying average historical
advertising rates for specific time periods.

   We trade certain advertising time for various goods and services. These
transactions are recorded at the estimated fair value of the goods or services
received. Revenue from trade transactions is recognized when advertisements are
broadcast and services or merchandise received are charged to expense or
capitalized when received or used.

   We record a valuation allowance to reduce our deferred tax assets to the
amount that is not likely to be realized. While we have considered future
taxable income and feasible tax planning strategies in assessing the need for a
valuation allowance, in the event that we were to determine that we would not
be able to realize all or part of our deferred tax assets in the future, an
adjustment to the deferred tax asset would be charged to income in the period
such a determination was made.

   We use derivative financial instruments for purposes other than trading,
such as hedging for long-term variable rate debt to reduce our exposure to
fluctuations in interest rates, as dictated by our credit agreement and for
hedging fair value changes attributable to changes in the benchmark interest
rate on fixed rate debt. All derivatives are recognized on our balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether
a derivative is designated as part of a hedge transaction and, if it is, the
type of hedge transaction. We assess, both at its inception and on an ongoing
basis, whether the derivatives that are used in hedging transactions are highly
effective in offsetting the changes in cash flows of hedged items. We assess
hedge ineffectiveness on a quarterly basis and record the gain or loss related
to the ineffective portion to current earnings. If we determine that a cash
flow hedge is no longer probable of occurring, we discontinue hedge accounting
for the affected portion of the forecasted transaction, and any unrealized gain
or loss on the contract is recognized in current earnings.

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

Recently Issued Accounting Standards

   In June 1998, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." Subsequently, SFAS No. 133 was
amended by the issuance of SFAS No. 137 and SFAS No. 138. These amendments
modify the provisions and effective date of SFAS No. 133. SFAS No. 133, as
amended, is effective
for fiscal quarter of all fiscal years beginning after June 15, 2000. Upon
adoption of SFAS No. 133, on January 1, 2001, we recorded other comprehensive
loss to recognize at fair value all derivatives that were designated as cash
flow hedging instruments, which was comprised of unrealized losses related to
our interest rate swaps of $0.2 million. This unrealized net loss increased by
$3.5 million during the year ended December 31, 2001 due to the deferral of the
effective portion of additional derivative losses on hedges of variable rate
debt. As of December 31, 2001, the cumulative unrealized loss, net of
reclassifications to earnings as required by SFAS No. 133, on our interest rate
swaps was $3.7 million.

   In July 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS
No. 142. Goodwill and Other Intangible Assets. SFAS No. 141 prospectively
prohibits the pooling of interest method of accounting for business
combinations initiated after June 30, 2001. SFAS No. 142 requires companies to
cease amortizing certain intangible assets including goodwill and FCC licenses.
The amortization of existing goodwill and FCC

                                      40

<PAGE>

licenses ceased on December 31, 2001. Any goodwill and FCC licenses resulting
from acquisitions completed after June 30, 2001 will not be amortized. SFAS No.
142 also establishes a new method of testing goodwill and FCC licenses for
impairment on an annual basis or on an interim basis if an event occurs or
circumstances change which would reduce the fair value of a reporting unit
below its carrying value. The adoption of SFAS No. 142 will result in our
discontinuation of amortization of goodwill and FCC licenses; however, we will
be required to test our goodwill and FCC licenses for impairment under the new
standard during 2002, which could have an adverse effect on our future results
of operations if an impairment occurs. We are currently in the process of
assessing the impact of SFAS No. 142, including how it will measure impairments
for goodwill and FCC licenses, however we have not yet had sufficient time to
complete such evaluation. During the year ended December 31, 2001, we incurred
goodwill amortization expense of $3.6 million. During the year ended December
31, 2001, we incurred amortization expense related to its FCC licenses of $5.2
million. We do not expect that our net income will be impacted by amortization
expense related to goodwill or FCC licenses as a result of implementing SFAS
No. 142 on January 1, 2002.

   In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets", which is effective January 1, 2002. SFAS No.
144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of" and the accounting and
reporting provisions relating to the disposal of a segment of a business
described in Accounting Principles Board Opinion No. 30. We do not expect that
the adoption of SFAS No. 144 will have a material impact on our financial
statements.

Item 7A.  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 December 31, 2001 under our senior credit facilities bear
interest at the base rate, or Eurodollar rate, plus the applicable margin, as
defined (ranging from 5.23% to 6.64% at December 31, 2001). Interest is payable
in accordance with the credit agreements.

   The following table estimates the changes to cash flow of operations if
interest rates were to fluctuate by 100 or 50 basis points, or BPS (where 100
basis points represents one percentage point) for a twelve-month time horizon:
<TABLE>
<CAPTION>
                               Interest rate                 Interest rate
                                 decrease                      increase
                              ---------------               ---------------
                                              No change to
                              100 BPS 50 BPS  interest rate 50 BPS  100 BPS
                              ------- ------- ------------- ------- -------
                                         (dollars in thousands)
    <S>                       <C>     <C>     <C>           <C>     <C>
    Senior credit facilities. $ 6,533 $ 6,607    $ 6,682    $ 6,756 $ 6,830
    Senior subordinated notes  16,128  16,428     16,728     17,028  17,328
    Senior discount notes....   3,328   3,328      3,328      3,328   3,328
                              ------- -------    -------    ------- -------
    Total.................... $25,989 $26,363    $26,738    $27,112 $27,486
                              ======= =======    =======    ======= =======
</TABLE>

   At December 31, 2001, we had in effect three interest rate swap agreements,
with commercial banks, with notional amounts of $93.3 million, $20.0 million
and $60.0 million. Our $93.3 million and $20.0 million interest rate swap
agreements require us to pay a fixed rate and receive a floating rate thereby
creating fixed rate debt. The $60.0 million swap agreement requires us to pay a
floating rate and receive a fixed rate. The differential to be paid or received
on the swaps is accrued as an adjustment to interest expense. We are exposed to
credit loss in the event of nonperformance by the counterparty. The net fair
value of the interest rate swap agreements, which represent the cash that we
would pay to settle the agreements, was approximately $2.4 million and $0.2
million at December 31, 2001 and December 31, 2000, respectively.

                                      41

<PAGE>

   The table below provides information about our derivative financial
instruments that are sensitive to changes in interest rates. The table presents
notional amounts and weighted average interest rates by expected (contractual)
maturity dates. Notional amounts are used to calculate the contractual payments
to be exchanged under the contract. Weighted average variable rates are based
on implied forward rates in the yield curve at the reporting date.


<TABLE>
<CAPTION>
                                   Expected                       Fair
                                  Expiration   2002     2008      Value
                                  ---------- --------  -------    ------
                                         (dollars in thousands)
        <S>                       <C>        <C>       <C>        <C>
        Interest Rate Derivatives
        Variable to Fixed........    2002    $113,320             (4,022)
           Average pay rate......                4.91%
           Average receive rate..                2.20%
        Fixed to Variable........    2008              $60,000     1,590
           Average pay rate......                        11.10%
           Average receive rate..                        12.00%
</TABLE>

  Impact of Inflation

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

Item 8.  Consolidated Financial Statements and Supplementary Data

   The financial statements and schedules are listed in Part IV, Item 14 of
this Form 10-K.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

   None.

                                      42

<PAGE>

                                   PART III

Item 10.  Directors and Executive Officers

   The table below sets forth information about Nexstar's board of managers, or
directors, and executive officers:

<TABLE>
<CAPTION>
   Name                 Age              Position With Company
   ----                 --- ------------------------------------------------
   <S>                  <C> <C>
   Perry A. Sook....... 44  President, Chief Executive Officer and Director
   Duane A. Lammers.... 40  Executive Vice President
   Shirley E. Green.... 42  Vice President, Finance
   Susana G. Willingham 35  Vice President, Corporate News Director
   Richard Stolpe...... 45  Vice President, Director of Engineering
   Peni A. Garber...... 39  Vice President, Assistant Secretary and Director
   Jay M. Grossman..... 42  Vice President, Assistant Secretary and Director
   Peggy Koenig........ 45  Vice President and Assistant Secretary
   Royce Yudkoff....... 46  Vice President, Assistant Secretary and Director
   Erik Brooks......... 34  Vice President, Assistant Secretary and Director
</TABLE>

   Perry A. Sook formed Nexstar's predecessor in 1996. Since its inception, Mr.
Sook has served as Nexstar's President and Chief Executive Officer and as a
Director. From 1991 to 1996, Mr. Sook was a principal of Superior
Communications Group, Inc. Mr. Sook currently serves as a director of
Pennsylvania Association of Broadcasters and the Television Bureau of
Advertising.

   Duane A. Lammers was promoted to Nexstar's Executive Vice President in
February 2001. Prior to that, Mr. Lammers served as Nexstar's Vice President,
Director of Sales and Marketing from 1998 until January 2001. He was employed
as a Nexstar station general manager from 1997 to 1999. Prior to joining
Nexstar, Mr. Lammers was the General Manager of WHTM, the ABC affiliate in
Harrisburg, Pennsylvania from 1994 to 1997.

   Shirley E. Green was promoted to Nexstar's Vice President, Finance in
February 2001. Prior to that, Ms. Green served as Nexstar's Controller since
1997. Prior to her employment at Nexstar, from 1994 to 1997, Ms. Green was
Business Manager at KOCB, Oklahoma City, Oklahoma, which was owned by Superior
Communications Group, Inc.

   Susana G. Willingham has served as Nexstar's Vice President, Corporate News
Director since 1997. She served as Assistant News Director for WHTM from 1994
to 1997. Prior to that, Ms. Willingham was the Assistant News Director for KFDX
from 1992 to 1993.

   Richard Stolpe has served as Nexstar's Vice President, Director of
Engineering since January 2000. Prior to that, Mr. Stolpe served as Director of
Engineering from 1998 to 2000. Prior to joining Nexstar, Mr. Stolpe was
employed by WYOU from 1996 to 1998 as both Assistant Chief Engineer and Chief
Engineer.

   Peni A. Garber  served as a Vice President, Assistant Secretary and a
Director of Nexstar from 1997 until 2002. Ms. Garber is a Partner at ABRY. From
1990 to 2000, she had served as a Principal and Secretary of ABRY. Prior to
joining ABRY, Ms. Garber served as Senior Accountant at Price Waterhouse LLP.
Ms. Garber is presently a director (or the equivalent) of several private
companies, including Network Music Holdings, LLC, Quorum Broadcast Holdings LLC
and Muzak Holdings LLC. Ms. Garber resigned as Vice President, Assistant
Secretary and Director of Nexstar on March 7, 2002.

   Jay M. Grossman has served as a Vice President, Assistant Secretary and a
Director of Nexstar since 1997. Since 1996, Mr. Grossman has served as a
Partner of ABRY. Prior to joining ABRY, Mr. Grossman was an investment banker
specializing in media and entertainment at Kidder Peabody and at Prudential
Securities. Mr. Grossman currently serves as a director (or the equivalent) of
several private companies including TV Fanfare, Consolidated Theaters,
WideOpenWest and Network Music Holdings, LLC.

                                      43

<PAGE>

   Peggy Koenig served as a Vice President and Assistant Secretary of Nexstar
from 1997 until 2002. Ms. Koenig is a partner in ABRY, which she joined in
1993. From 1988 to 1992, Ms. Koenig was a Vice President, partner and member of
the Board of Directors of Sillerman Communication Management Corporation, a
merchant bank, which made investments principally in the radio industry. Ms.
Koenig was the Director of Finance from 1986 to 1988 for Magera Management, an
independent motion picture financing company. She is presently a director (or
the equivalent) of Connoisseur Communications Partners, L.P., Pinnacle Holdings
Inc., Network Music Holdings LLC and Mercom. Ms. Koenig resigned as a Vice
President and Assistant Secretary of Nexstar on March 7, 2002.

   Royce Yudkoff has served as a Vice President, Assistant Secretary and a
Director of Nexstar since 1997. Since 1989, Mr. Yudkoff has served as the
President and Managing Partner of ABRY. Prior to joining ABRY, Mr. Yudkoff was
affiliated with Bain & Company, serving as a partner from 1985 to 1988. Mr.
Yudkoff is presently a director (or the equivalent) of several companies,
including Quorum Broadcast Holdings LLC, Metrocall, Inc. and Muzak Holdings LLC.

   Erik Brooks became a Vice President, Assistant Secretary and Director of
Nexstar on March 7, 2002. Mr. Brooks is a Principal at ABRY, which he joined in
1999. Prior to joining ABRY, Mr. Brooks was a Vice President at NCH Capital, a
private equity investment fund.

Item 11.  Executive Compensation

Summary Compensation Table

<TABLE>
<CAPTION>
                                                    Annual Compensation
                                                    -------------------  All Other
                                                      Salary      Bonus Compensation
                                                     --------     ----- ------------
<S>                                                 <C>           <C>   <C>
Perry A. Sook...................................... $290,000       --      $5,031/(1)/
  President, Chief Executive Officer and Director
Duane A. Lammers...................................  185,000       --       1,376/(2)/
  Executive Vice President
Susana G. Willingham...............................  115,000       --         897/(3)/
  Vice President, News Director
Shirley E. Green...................................  100,000       --       5,145/(4)/
  Vice President, Finance
Richard Stolpe.....................................   70,000       --       2,741/(5)/
  Vice President, Corporate Chief Engineer
</TABLE>
--------
(1) Includes $2,684 associated with personal use of company owned vehicle and
    $1,629 associated with moving expenses reimbursed by Nexstar.
(2) Includes $1,250 associated with personal use of company owned vehicle.
(3) Includes $783 associated with personal use of company owned vehicle.
(4) Includes $4,855 associated with personal use of company owned vehicle.
(5) Includes $2,636 associated with personal use of company owned vehicle.

Employment Agreements

   Perry A. Sook.  Mr. Sook is employed under an employment agreement with
Nexstar Broadcasting Group, Inc. as President and Chief Executive Officer. The
term of the agreement expires on December 31, 2004 and automatically renews for
successive one-year periods unless either party notifies the other of their
intention not to renew the agreement. Under the agreement, Mr. Sook's current
base salary is $150,000 for the six months ended December 31, 2001, $400,000
for the year ended December 31, 2002, $415,000 for the year ended December 31,
2003, and $430,000 for the year ended December 31, 2004 and each subsequent
year. In addition to his base salary, Mr. Sook is eligible to earn a targeted
annual bonus of $75,000 after the 2001 fiscal year, $100,000 after the 2002
fiscal year, $103,750 after the 2003 fiscal year, and $107,500 after the 2004
fiscal year and each

                                      44

<PAGE>

subsequent fiscal year, upon achievement of goals established by the board of
directors. In the event of termination for reasons other than cause, Mr. Sook
is eligible to receive his base salary for a period that is the shorter of one
year or until the term of his employment would otherwise be completed.

   Duane A. Lammers.  Mr. Lammers is employed under an amended employment
agreement with Nexstar Broadcasting Group, Inc. as Executive Vice President.
The agreement terminates on December 31, 2003 and automatically renews for
successive one-year periods unless either party notifies the other of its
intention not to renew the agreement. Under the agreement, Mr. Lammers' base
salary is $185,000 for the year ended December 31, 2001, $200,000 for the year
ended December 31, 2002 and $205,000 for the year ended December 31, 2003. In
addition to his base salary, Mr. Lammers is eligible to receive a targeted
annual bonus of $45,000 for the year ended April 30, 2001, $50,000 for the year
ended April 30, 2002, and $55,000 for the year ended April 30, 2003 at the
discretion of Nexstar's Chief Executive Officer, upon attainment of, among
other things, certain financial performance targets. In the event of
termination for reasons other than cause, Mr. Lammers is eligible to receive
his base salary for a period of six months.

   Shirley E. Green.  Ms. Green is employed under an amended employment
agreement with Nexstar Broadcasting Group, Inc. as Vice President, Finance. The
term of the agreement ends on February 28, 2005 and automatically renews for
successive one-year periods unless either party notifies the other of its
intention not to renew the agreement. Under the agreement, Ms. Green's current
base salary is $100,000 through February 28, 2003, $110,000 for the year ended
February 28, 2004 and $120,000 for the year ended February 28, 2005. In
addition to her base salary, Ms. Green is eligible to earn a targeted annual
bonus of $10,000 for the year ended 2002, $15,000 for the year ended 2003 and
$20,000 for the year ended 2004 at the discretion of Nexstar's Chief Executive
Officer, based on Ms. Green's attainment of goals set by Nexstar's Chief
Executive Officer. In the event of termination for reasons other than cause,
Ms. Green is eligible to receive her base salary for a period of six months.

   Susana G. Willingham.  Ms. Willingham is employed under an employment
agreement with Nexstar Broadcasting Group, Inc. as Vice President, Corporate
News Director. The initial term of the agreement terminates on January 1, 2004
and automatically renews for successive one-year periods unless either party
notifies the other of its intention not to renew the agreement. Under the
agreement, Ms. Willingham's base salary is $115,000 for the year ended December
31, 2001, $120,000 for the year ended December 31, 2002, and $125,000 for each
successive year thereafter. In addition to her base salary, Ms. Willingham is
eligible to earn an annual bonus, at the discretion of Nexstar's Chief
Executive Officer. In the event of termination for reasons other than cause,
Ms. Willingham is eligible to receive her base salary for a period of six
months.

   Richard Stolpe.  Mr. Stolpe is employed under an employment agreement with
Nexstar Broadcasting Group, Inc. as Vice President, Corporate Chief Engineer.
The initial term of the agreement ends on January 1, 2004 and automatically
renews for successive one-year periods unless either party notifies the other
of their intention not to renew the agreement. Under the agreement, Mr.
Stolpe's base salary is $70,000 for the year ended December 31, 2001, $75,000
for the year ended December 31, 2002, and $80,000 for each successive year
thereafter. In addition to his base salary, Mr. Stolpe is eligible to earn a
targeted annual bonus of $10,000 at the discretion of Nexstar's Chief Executive
Officer, upon attainment of certain goals. In the event of termination for
reasons other than cause, Mr. Stolpe is eligible to receive his base salary for
a period of six months.

Compensation of Managers

   Nexstar currently reimburses members of the board of managers for any
reasonable out-of-pocket expenses incurred by them in connection with
attendance at board and committee meetings.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

   The equity interests of Nexstar are indirectly 100% owned by Nexstar's
indirect parent company, Nexstar Broadcasting Group, L.L.C. David S. Smith owns
100% of the equity interests in the Bastet Group.

                                      45

<PAGE>

   The following table sets forth, as of December 31, 2001, information
regarding the equity interests of Nexstar Broadcasting beneficially owned by
(1) each equityholder who is known by Nexstar to beneficially own in excess of
five percent of the outstanding equity interests of Nexstar Broadcasting, (2)
each of Nexstar's managers and directors, (3) each of Nexstar's named executive
officers, and (4) all of Nexstar's executive officers, managers and directors
as a group. Unless otherwise indicated below, (1) the persons and entities
named in the table have sole voting and investment power with respect to all
equity interests beneficially owned, subject to applicable community property
laws and (2) the address of each of the individuals listed in the table is in
care of Nexstar Broadcasting Group, L.L.C., 200 Abington Executive Park, Suite
201, Clarks Summit, PA 18411.

<TABLE>
<CAPTION>
                                                                       Number of
                                                                         Equity     Percentage of
                                                                       Interests    Total Equity
                                                                      Beneficially    Interests
Name and Address of Beneficial Owner                                     Owned     Outstanding/(1)/
------------------------------------                                  ------------ ---------------
<S>                                                                   <C>          <C>
ABRY Broadcast Partners II, L.P......................................  3,274,787        49.4%
   18 Newbury Street
   Boston, MA 02116
ABRY Broadcast Partners III, L.P./(2)/...............................  2,091,132        31.5%
   18 Newbury Street
   Boston, MA 02116
BancAmerica Capital Investors I, L.P./(3)/...........................    613,264         9.2%
Nexstar Finance Holdings II, L.L.C./(4)/.............................         --          --
Royce Yudkoff/(5)(6)/................................................  5,365,919        80.9%
Perry A. Sook........................................................    432,626         6.5%
Shirley E. Green/(7)/................................................      9,850           *
Richard Stolpe/(8)/..................................................      3,110           *
Susana G. Willingham/(9)/............................................      3,110           *
Duane A. Lammers/(10)/...............................................     23,315           *
Jay M. Grossman/(6)/.................................................         --          --
Peni Garber/(6)/.....................................................         --          --
All managers, directors and executive officers as a group (8 persons)  5,837,930        88.1%
</TABLE>
--------
*  Less than 1%
(1) Nexstar Broadcasting has nine classes of equity interests outstanding. Each
    class of equity interest has been assigned a "point value." The number of
    equity interests beneficially owned and the percentage of total equity
    interests outstanding indicated in this table are reported on a point basis.
(2) Does not include 15,000 shares of Series BB preferred membership interests
    with an aggregate liquidation preference of $15,000,000. The Series BB
    preferred interests do not have a point value assigned to them.
(3) The address of BancAmerica Capital Investors I, L.P. is 100 North Tryon
    Street, 25th Floor, Charlotte, NC 28255-0001. Does not include 40,000
    shares of Series AA preferred membership interests with an aggregate
    liquidation preference of $40,000,000. The Series AA preferred interests do
    not have a point value assigned to them.
(4) Nexstar Finance Holdings II, L.L.C., an indirect subsidiary of Nexstar
    Broadcasting Group, L.L.C., is the sole manager of Nexstar Finance
    Holdings, L.L.C.
(5) Mr. Yudkoff is the sole trustee of ABRY Holdings III, Co., which is the
    sole member of ABRY Holdings III LLC, which is the sole general partner of
    ABRY Equity Investors, L.P., the sole general partner of ABRY Broadcast
    Partners III, L.P. Mr. Yudkoff is also the trustee of ABRY Holdings Co.,
    which is the sole member of ABRY Holdings LLC, which is the sole general
    partner of ABRY Capital, L.P., which is the sole general partner of ABRY
    Broadcast Partners II, L.P.
(6) The address of Mr. Yudkoff, Mr. Grossman and Ms. Garber is the address of
    ABRY.
(7) Includes 1,555, or 50%, of Ms. Green's class C-2 equity interests, subject
    to forfeiture if Ms. Green's employment is terminated prior to January 1,
    2003, decreasing to 777.5, or 25%, if termination occurs between January 1,
    2003 and January 1, 2004.
(8) Includes 1,555, or 50%, of Mr. Stolpe's class C-2 equity interests, subject
    to forfeiture if Mr. Stolpe's employment is terminated prior to January 1,
    2003, decreasing to 777.5, or 25%, if termination occurs between January 1,
    2003 and January 1, 2004.
(9) Includes 1,555, or 50%, of Ms. Willingham's class C-2 equity interests,
    subject to forfeiture if Ms. Willingham's employment is terminated prior to
    January 1, 2003, decreasing to 777.5, or 25%, if termination occurs between
    January 1, 2003 and January 1, 2004.
(10) Includes 5,051, or 25%, of Mr. Lammers' class C-1 equity interests,
     subject to forfeiture if Mr. Lammers' employment is terminated prior to
     May 1, 2002; and 1,555, or 50%, of Mr. Lammers class C-2 equity interests,
     subject to forfeiture if Mr. Lammers' employment is terminated prior to
     January 1, 2003, decreasing to 777.5, or 25%, if termination occurs
     between January 1, 2003 and January 1, 2004.

                                      46

<PAGE>

Item 13.  Certain Relationships and Related Transactions

  L.L.C. Agreement

   ABRY Broadcast Partners II, L.P., ABRY Broadcast Partners III, L.P. Nexstar
Equity Corp., Banc America Capital Investors I, L.P. and each of the members of
Nexstar Broadcasting Group, L.L.C., including Perry Sook, Shirley Green, Duane
Lammers, Susana Willingham and Richard Stolpe, are parties to a fifth amended
and restated limited liability company agreement dated as of November 14, 2001,
pursuant to which Nexstar Broadcasting Group, L.L.C. is organized. The
agreement provides for capital contributions to be made by the members in
exchange for membership interests, which are allocated at the discretion of
ABRY Broadcast Partners II, L.P., as manager of Nexstar Broadcasting Group,
L.L.C. As manager, ABRY Broadcast Partners II, L.P. exercises full control over
all of the activities of Nexstar Broadcasting Group, L.L.C. and is reimbursed
for all expenses incurred as manager. Nexstar Broadcasting Group, L.L.C. may be
dissolved upon a vote by those members owning a majority of the outstanding
class A interests.

  Investor Rights Agreement

   Nexstar Broadcasting Group, ABRY Broadcast Partners II, L.P., ABRY Broadcast
Partners III, L.P., Nexstar Equity Corp. and each of the other members of
Nexstar Broadcasting Group, L.L.C., including Perry Sook, Shirley Green, Duane
Lammers, Susana Willingham and Richard Stolpe, are parties to a fourth amended
and restated investor rights agreement, dated as of August 7, 2001. Pursuant to
the investors agreement, the parties agreed to vote their equity interests in
Nexstar Broadcasting Group to elect Mr. Sook to the board of directors. The
investors agreement also contains (1) co-sale rights exercisable in the event
of certain sales by ABRY Broadcast Partners II, L.P. and ABRY Broadcast
Partners III, L.P., (2) restrictions on transfers of equity interests by all
members and their permitted transferees, and (3) drag-along sale rights
exercisable by the holders of a majority of the class A interests of Nexstar
Broadcasting Group in the event of an approved sale of Nexstar Broadcasting
Group. The voting, co-sale, drag-along and transfer restrictions will terminate
upon the consummation of the first to occur of (a) a public offering within
certain parameters that are set forth in the investors agreement, or (b) a sale
of all of the equity securities or assets of Nexstar Broadcasting Group to
independent third party.

  ABRY Management and Consulting Services Agreement

   Pursuant to a second amended and restated management and consulting services
agreement between Nexstar Broadcasting Group, Inc. and ABRY Partners, LLC (as
successor to ABRY Partners, Inc.), dated as of January 5, 1998, ABRY Partners,
LLC was entitled to a management fee for certain financial and management
consulting services provided to Nexstar Broadcasting Group, Inc., including in
connection with any acquisitions or divestitures in which ABRY Partners, LLC
had substantially assisted in the organization or structuring. Under the
agreement, the management fee was based on the purchase price of any such
acquisition or divestiture, as well as a certain amount per annum paid for each
broadcast station owned or managed by Nexstar Broadcasting Group, L.L.C. or its
subsidiaries. ABRY Partners, LLC was also reimbursed for any reasonable
out-of-pocket expenses incurred. ABRY Partners, LLC terminated the agreement
effective December 31, 2000.

  Perry Sook Guaranty

   Pursuant to an individual loan agreement dated January 5, 1998, Bank of
America National Trust and Savings Association has established a loan facility
under which Mr. Sook, Nexstar's President and Chief Executive Officer, may
borrow an aggregate amount of up to $3.0 million. As of December 31, 2001,
approximately $2.8 million in principal amount of loans were outstanding under
that facility. The proceeds of those loans have been and will be used by Mr.
Sook in part to invest in Nexstar Broadcasting Group, L.L.C. Nexstar has
guaranteed the payment of up to $3.0 million in principal amount of those
loans, pursuant to a continuing guaranty dated June 16, 2001.

                                      47

<PAGE>

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

   Nexstar has agreements in place with entities that are part of the Bastet
Group in three markets: Erie, Pennsylvania, Wichita Falls, Texas, and Wilkes
Barre-Scranton, Pennsylvania.

   Nexstar Broadcasting of Erie, L.L.C., an indirect subsidiary of Nexstar, and
Bastet Broadcasting, Inc. are parties to an amended time brokerage agreement
dated as of July 31, 1998, which expires on August 16, 2006 and may be renewed
for one term of five years with 90 days notice. This agreement allows Nexstar
to program most of WFXP's broadcast time, sell the station's advertising time
and retain the advertising revenue.

   Mission Broadcasting of Wichita Falls, Inc. ("Mission of Wichita Falls") and
Nexstar Broadcasting of Wichita Falls, L.L.C., an indirect subsidiary of
Nexstar, are parties to a shared services agreement dated as of June 1, 1999,
which has an initial term of 10 years. Under this agreement, Nexstar
Broadcasting of Wichita Falls L.L.C. agreed with Mission of Wichita Falls to
share the costs of certain services that Nexstar's station KFDX and Mission of
Wichita Falls' stations KJTL and KJBO-LP individually incurred. These shared
services include news production, technical maintenance, and security, among
other services, but do not include the services of senior management personnel,
programming or sales. In consideration of certain services provided to KJTL and
KJBO-LP by KFDX personnel, Mission of Wichita Falls pays Nexstar a monthly
service fee, calculated based on the cash flow of KJTL and KJBO-LP.

   Mission of Wichita Falls and Nexstar Broadcasting of Wichita Falls, L.L.C.
are also parties to an agreement for the sale of commercial time dated as of
June 1, 1999, which has an initial term of 10 years. Under this agreement,
called a joint sales agreement, Nexstar Broadcasting of Wichita Falls, L.L.C.
purchases advertising time on KJTL and KJBO-LP and retains the advertising
revenue, in return for payments to Mission of Wichita Falls of $100,000 per
month, subject to adjustment to assure that each payment equals Mission of
Wichita Falls's actual operating costs plus $10,000 per month.

   Nexstar Broadcasting of Northeastern Pennsylvania, L.L.C., an indirect
subsidiary of Nexstar, and Bastet Broadcasting, Inc. are parties to a shared
services agreement dated as of January 5, 1998, which has an initial term of 10
years. The terms of this agreement are substantially similar to the terms of
Nexstar's shared services agreement with Mission of Wichita Falls and provides
for the parties to share the costs of certain services that Nexstar's station
WBRE and Bastet's station WYOU otherwise would separately incur.

   Mission Broadcasting of Joplin, Inc. ("Mission of Joplin") and GOCOM
Broadcasting of Joplin, L.L.C. are parties to a time brokerage agreement dated
December 31, 2001 to provide services for KODE, the ABC affiliate in Joplin,
Missouri. This agreement allows Mission of Joplin to program most of KODE's
broadcast time, sell the station's advertising time and retain advertising
revenue in return for a monthly fee paid to GOCOM. The time brokerage agreement
will be terminated upon the closing of the acquisition or the termination of
the Purchase and Sale agreement. The same parties entered into a Purchase and
Sale Agreement for Mission of Joplin to purchase substantially all the assets
of KODE. The purchase price for the assets is $14.0 million and will be
financed under the senior credit facilities. The scheduled closing date of the
acquisition is September 30, 2002.

   Nexstar Broadcasting of Peoria, L.L.C. ("Nexstar of Peoria") and WYZZ, Inc.,
a subsidiary of Sinclair Broadcast Group, Inc., entered into an outsourcing
agreement. This agreement allows for Nexstar of Peoria to provide certain
engineering, production, sales and administrative services for WYZZ, the Fox
affiliate in the Peoria-Bloomington, Illinois market. The parties will share in
the combined broadcast cash flow generated by WYZZ and, Nexstar-owned, WMBD.
The effective date of the agreement is December 1, 2001 and has an initial term
of seven years.

  Option Agreements

   In consideration of Nexstar's guarantee of indebtedness incurred by entities
in the Bastet Group, Nexstar also has options to purchase the assets of the
Bastet group's stations in Erie, Wichita Falls and Wilkes Barre- Scranton
(subject to prior FCC approval). In Erie, Bastet Broadcasting, Inc., David S.
Smith, and Nexstar

                                      48

<PAGE>

Broadcasting Group, L.L.C., Nexstar's indirect parent, are parties to an option
agreement dated as of November 30, 1998. In Wichita Falls, Mission Broadcasting
of Wichita Falls, Inc., David S. Smith, and Nexstar Broadcasting of Wichita
Falls, L.L.C., an indirect subsidiary of Nexstar, are parties to an option
agreement dated as of June 1999. In Wilkes Barre-Scranton, Bastet Broadcasting,
Inc., David S. Smith, and Nexstar Broadcasting of Northeastern Pennsylvania,
L.L.C., an indirect subsidiary of Nexstar, are parties to an option agreement
dated as of May 19, 1998. Under the terms of these option agreements, Nexstar
may exercise its option upon written notice to the counterparty to the relevant
option agreement. In each option agreement, the exercise price of the option
equals the station's existing indebtedness plus assumption of the station's
operating liabilities. The relevant Bastet Group entity and/or David S. Smith
may terminate each option agreement by written notice any time after the
seventh anniversary date of the relevant option agreement.

  Management Agreement

   Bastet Broadcasting, Inc., Mission Broadcasting of Wichita Falls, Inc.,
Mission Broadcasting of Amarillo, Inc., David S. Smith and Nancie J. Smith, the
wife of David S. Smith, are parties to a compensation agreement. Under this
agreement, the Bastet Group pays David S. Smith and Nancie J. Smith
collectively up to $200,000 per year for certain management services.

                                      49

<PAGE>

                                    PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

   (a) Documents filed as part of this report:

   (1) Financial Statements.  The following financial statements of Nexstar
Finance Holdings, L.L.C. have been included on pages F-1 through F-22 of this
Annual Report on Form 10-K:
  .  Report of Independent Accountants
  .  Consolidated Balance Sheets at December 31, 2001 and December 31, 2000
  .  Consolidated Statements of Operations for the years ended December 31,
     2001, December 31, 2000 and December 31, 1999
  .  Consolidated Statement of Changes in Member's Interest for the years ended
     December 31, 2001, December 31, 2000 and December 31, 1999
  .  Consolidated Statement of Cash Flows for years ended December 31, 2001,
     December 31, 2000 and December 31, 1999
  .  Notes to Consolidated Financial Statements

   (3) Exhibits.  The exhibits filed in response to Item 601 of Regulation S-K
are listed in the Exhibit Index beginning on page E-1 of this Annual Report on
Form 10-K.

   (b)   Reports on Form 8-K  Neither Nexstar Finance Holdings, L.L.C. nor
Nexstar Finance Holdings, Inc. filed reports on Form 8-K during the quarter
ended December 31, 2001.

                                      50

<PAGE>

                                  SIGNATURES

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

                                          NEXSTAR FINANCE HOLDINGS, L.L.C.

                                                   /S/  PERRY A. SOOK
                                          By: _______________________________
                                                      Perry A. Sook
                                          President and Chief Executive Officer

March 26, 2002

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities indicated on March 26, 2002.

<TABLE>
<CAPTION>
               Name                                      Title
               ----                                      -----
<C>                                 <S>

        /S/  PERRY A. SOOK          Director, President and Chief Executive Officer
----------------------------------    (Principal Executive Officer)
           Perry A. Sook

       /S/  SHIRLEY E. GREEN        Vice President-Finance and Secretary
----------------------------------    (Principal Financial and Accounting Officer)
         Shirley E. Green

        /S/  ROYCE YUDKOFF          Vice President and Assistant Secretary
----------------------------------
           Royce Yudkoff

       /S/  JAY M. GROSSMAN         Vice President and Assistant Secretary
----------------------------------
          Jay M. Grossman

Nexstar Finance Holdings II, L.L.C. Sole Member of Nexstar Finance Holdings, L.L.C.


            /S/  PERRY A. SOOK
----------------------------------
By:  Perry A. Sook
Its: President and Chief Executive Officer
</TABLE>

                                      51

<PAGE>

                                  SIGNATURES

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

                                          NEXSTAR FINANCE HOLDINGS, INC.

                                                   /S/  PERRY A. SOOK
                                          By: _______________________________
                                                      Perry A. Sook
                                          President and Chief Executive Officer

March 26, 2002

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities indicated on March 26, 2002.

             Name                               Title
             ----                               -----

      /S/  PERRY A. SOOK   Director, President and Chief Executive Officer
     ---------------------   (Principal Executive Officer)
         Perry A. Sook

     /S/  SHIRLEY E. GREEN Vice President-Finance and Secretary
     ---------------------   (Principal Financial and Accounting Officer)
       Shirley E. Green

     /S/  JAY M. GROSSMAN  Vice President, Assistant Secretary and Director
     ---------------------
        Jay M. Grossman

       /S/  ERIK BROOKS    Director
     ---------------------
          Erik Brooks

      /S/  ROYCE YUDKOFF   Vice President, Assistant Secretary and Director
     ---------------------
         Royce Yudkoff

                                      52

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                   Page
                                                -                                                  ----
<S>                                                                                                <C>
Report of Independent Accountants................................................................. F-2

Consolidated Balance Sheets at December 31, 2001 and December 31, 2000............................ F-3

Consolidated Statements of Operations for the years ended December 31, 2001, December 31, 2000 and
  December 31, 1999............................................................................... F-4

Consolidated Statement of Changes in Member's Interest for the years ended December 31, 2001,
  December 31, 2000 and December 31, 1999......................................................... F-5

Consolidated Statement of Cash Flows for years ended December 31, 2001, December 31, 2000 and
  December 31, 1999............................................................................... F-6

Notes to Consolidated Financial Statements........................................................ F-7
</TABLE>

                                      F-1

<PAGE>

                       Report of Independent Accountants

To the Member of Nexstar Finance Holdings, L.L.C.:

   In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations and comprehensive loss, of member's
interest and of cash flows present fairly, in all material respects, the
financial position of Nexstar Finance Holdings, L.L.C., a wholly-owned indirect
subsidiary of Nexstar Broadcasting Group, L.L.C., and its subsidiaries (the
"Company"), at December 31, 2001 and 2000, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
2001 in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America which require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

   As discussed in Note 2 to the consolidated financial statements, effective
January 1, 2001, the Company adopted Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities."

March 4, 2002

                                      F-2

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

                          CONSOLIDATED BALANCE SHEETS
                          December 31, 2001 and 2000

<TABLE>
<CAPTION>
                                                                      2001        2000
                                                                    --------    --------
                                                                   (dollars in thousands)
<S>                                                                <C>          <C>
Assets
Current assets:
   Cash and cash equivalents...................................... $  5,802     $  2,750
   Accounts receivable, net of allowance for doubtful accounts of.
   $490 and $415, respectively....................................   25,442       23,274
   Current portion of broadcast rights............................   10,062       10,866
   Prepaid expenses and other current assets......................      993          530
   Deferred tax assets............................................      276          280
   Taxes receivable...............................................      233           --
                                                                    --------    --------
       Total current assets.......................................   42,808       37,700
   Property and equipment, net....................................   57,383       55,344
   Broadcast rights...............................................    3,685        4,180
   Due from parent entities.......................................      958          494
   Other noncurrent assets........................................    8,240           77
   Intangible assets, net.........................................  313,280      220,480
                                                                    --------    --------
       Total assets............................................... $426,354     $318,275
                                                                    ========    ========
Liabilities and Member's Interest
Current liabilities:
   Current portion of debt........................................ $    488     $ 11,125
   Current portion of capital lease obligations...................       23           61
   Current portion of broadcast rights payable....................   10,242       10,754
   Accounts payable...............................................    3,732        4,264
   Accrued expenses...............................................    3,986        2,795
   Taxes payable..................................................       --          625
   Interest payable...............................................    6,041          308
   Deferred revenue...............................................      335          368
   Due to Midwest Television, Inc.................................       --        2,256
                                                                    --------    --------
       Total current liabilities..................................   24,847       32,556
Debt..............................................................  304,144      242,347
Capital lease obligations.........................................       --           23
Broadcast rights payable..........................................    3,770        4,262
Deferred tax liabilities..........................................    6,892        7,563
Other liabilities.................................................    4,022           --
                                                                    --------    --------
       Total liabilities..........................................  343,675      286,751
                                                                    --------    --------
Commitments and contingencies (Note 12)
Member's interest:
   Contributed capital............................................  154,736       61,531
   Accumulated deficit............................................  (68,326)     (30,007)
   Accumulated other comprehensive loss on derivative instruments.   (3,731)          --
                                                                    --------    --------
       Total member's interest....................................   82,679       31,524
                                                                    --------    --------
       Total liabilities and member's interest.................... $426,354     $318,275
                                                                    ========    ========
</TABLE>

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

                                      F-3

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
             For the Years Ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                             2001      2000      1999
                                                           --------  --------  --------
                                                              (dollars in thousands)
<S>                                                        <C>       <C>       <C>
Revenues (excluding trade and barter)..................... $114,474  $124,631  $ 91,058
Less: commissions.........................................  (15,420)  (17,546)  (12,569)
                                                           --------  --------  --------
Net revenues (excluding trade and barter).................   99,054   107,085    78,489
Trade and barter revenues.................................   11,675    10,382     8,470
                                                           --------  --------  --------
       Total net revenues.................................  110,729   117,467    86,959
                                                           --------  --------  --------
Expenses:
   Operating..............................................   31,332    29,269    23,760
   Selling, general and administrative....................   28,180    28,790    23,645
   Amortization of broadcast rights.......................   17,344    16,905    13,580
   Amortization of intangible assets......................   21,117    14,750    12,983
   Depreciation...........................................   12,694     9,183     7,483
                                                           --------  --------  --------
       Total expenses.....................................  110,667    98,897    81,451
                                                           --------  --------  --------
Income from operations....................................       62    18,570     5,508
Interest expense, including amortization of debt
  financing costs.........................................  (38,794)  (20,045)  (16,282)
Interest income...........................................      316       309       261
Other expense, net........................................     (519)     (259)     (249)
                                                           --------  --------  --------
Loss before income taxes..................................  (38,935)   (1,425)  (10,762)
Income tax benefit (expense)..............................      879    (1,098)     (658)
                                                           --------  --------  --------
Loss before extraordinary loss from modification of credit
  facility................................................  (38,056)   (2,523)  (11,420)
Extraordinary loss from modification of
  credit facility, net of tax (Note 9)....................     (263)       --    (2,829)
                                                           --------  --------  --------
Net loss.................................................. $(38,319) $ (2,523) $(14,249)
                                                           ========  ========  ========
Other comprehensive loss:
   Cumulative effect of change in accounting principle.... $   (241) $     --  $     --
   Deferral of unrealized derivative gains and losses.....   (3,490)       --        --
                                                           --------  --------  --------
Net loss and other comprehensive loss..................... $(42,050) $ (2,523) $(14,249)
                                                           ========  ========  ========
</TABLE>

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

                                      F-4

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

            CONSOLIDATED STATEMENT OF CHANGES IN MEMBER'S INTEREST
             For the Years Ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                Other      Total
                                                    Contributed Accumulated Comprehensive Member's
                                                      Capital     Deficit       Loss      Interest
                                                    ----------- ----------- ------------- --------
                                                                (dollars in thousands)
<S>                                                 <C>         <C>         <C>           <C>
Balance at December 31, 1999.......................  $ 61,671    $(27,484)     $    --    $ 34,187
Contributions......................................        10          --           --          10
Distributions......................................      (150)         --           --        (150)
Net loss...........................................        --      (2,523)          --      (2,523)
                                                     --------    --------      -------    --------
Balance at December 31, 2000.......................    61,531     (30,007)          --      31,524
Contributions......................................   101,265          --           --     101,265
Distributions......................................    (8,060)         --           --      (8,060)
Net loss...........................................        --     (38,319)          --     (38,319)
Cumulative effect of change in accounting principle        --          --         (241)       (241)
Deferral of unrealized derivative gains and losses.        --          --       (3,490)     (3,490)
                                                     --------    --------      -------    --------
Balance at December 31, 2001.......................  $154,736    $(68,326)     $(3,731)   $ 82,679
                                                     ========    ========      =======    ========
</TABLE>

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

                                      F-5

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
             For the Years Ended December 31, 2001, 2000 and 1999


<TABLE>
<CAPTION>
                                                                                         2001       2000      1999
                                                                                       ---------  --------  ---------
                                                                                           (dollars in thousands)
<S>                                                                                    <C>        <C>       <C>
Cash flows from operating activities:
    Net loss.......................................................................... $ (38,319) $ (2,523) $ (14,249)
    Adjustments to reconcile net loss to net cash provided by operating activities:
       Deferred income taxes..........................................................      (651)     (549)      (367)
       Depreciation of property and equipment.........................................    12,694     9,183      7,483
       Amortization of intangible assets..............................................    21,117    14,750     12,983
       Amortization of debt financing costs...........................................     3,805       178        155
       Amortization of broadcast rights, net of barter................................     8,328     8,356      7,205
       Payments for broadcast rights..................................................    (8,001)   (8,426)    (6,916)
       Loss on asset disposal, net....................................................       330       259        249
       Loss from modification of credit facility, net of tax..........................       263        --      2,829
       Amortization of debt discount..................................................     2,537        --         --
       Effect of accounting for derivative instruments................................       290        --         --
    Changes in assets and liabilities:
       Increase in accounts receivable and due from parent entities...................    (2,633)   (1,574)    (9,390)
       (Increase) decrease in prepaid expenses and other current assets...............      (463)      (77)       315
       Increase in taxes receivable...................................................      (233)       --         --
       (Increase) decrease in other noncurrent assets.................................      (573)       50         94
       Increase in accounts payable and accrued expenses..............................       659        94      3,220
       Increase (decrease) in taxes payable...........................................      (625)      541       (251)
       Increase (decrease) in interest payable........................................     5,733    (2,091)     2,399
       Increase (decrease) in deferred revenue........................................       (33)      199       (122)
       Increase (decrease) in due to Midwest Television, Inc..........................    (2,256)   (1,815)     4,070
                                                                                       ---------  --------  ---------
          Net cash provided by operating activities...................................     1,969    16,555      9,707
                                                                                       ---------  --------  ---------
Cash flows from investing activities:
    Additions to property and equipment, net..........................................    (5,701)   (5,693)    (6,627)
    Proceeds on sales of assets.......................................................       111        98          6
    Acquisition of broadcast properties...............................................  (127,505)  (46,493)   (82,379)
    Downpayment on acquisition of station.............................................    (6,000)       --         --
                                                                                       ---------  --------  ---------
          Net cash used for investing activities......................................  (139,095)  (52,088)   (89,000)
                                                                                       ---------  --------  ---------
Cash flows from financing activities:
    Proceeds from debt issuance.......................................................   638,838        --    160,872
    Repayment of loans................................................................  (616,365)  (13,544)  (128,399)
    Proceeds from revolver draws, net.................................................    24,500    63,500     30,357
    Note payable to related party.....................................................        --   (14,522)    14,522
    Capital contributions.............................................................   101,265        10      3,023
    Distributions.....................................................................    (8,060)     (150)       (57)
                                                                                       ---------  --------  ---------
          Net cash provided by financing activities...................................   140,178    35,294     80,318
                                                                                       ---------  --------  ---------
Net increase (decrease) in cash and cash equivalents..................................     3,052      (239)     1,025
Cash and cash equivalents at beginning of year........................................     2,750     2,989      1,964
                                                                                       ---------  --------  ---------
Cash and cash equivalents at end of year.............................................. $   5,802  $  2,750  $   2,989
                                                                                       =========  ========  =========
Supplemental schedule of noncash activities:
    Cash paid for interest............................................................ $  26,276  $ 21,610  $  13,292
                                                                                       =========  ========  =========
    Cash paid for taxes............................................................... $     658  $  1,070  $   1,110
                                                                                       =========  ========  =========
</TABLE>

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

                                      F-6

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  Organization and Business Operations

   Nexstar Finance Holdings, L.L.C. ("Nexstar") owns, operates and programs,
through its subsidiaries, six NBC-affiliated television stations, three
ABC-affiliated television stations and four CBS-affiliated television stations
in the United States of America. Nexstar has an outsourcing agreement to
provide services for a Fox affiliate owned by a subsidiary of Sinclair
Broadcast Group, Inc. Through three special purpose entities (Note 4), Nexstar
(i) programs one Fox-affiliated television station under a Time Brokerage
Agreement ("TBA") and has a Shared Services Agreement ("SSA") with a
CBS-affiliated television station and (ii) has an SSA and a Joint Sales
Agreement ("JSA") with a Fox-affiliated television station and a low-power
UPN-affiliated television station. Additionally, Mission Broadcasting of
Joplin, Inc. ("Mission of Joplin") provides most of the programming to an
ABC-affiliated television station under a TBA and intends to purchase the
underlying licenses and assets in September 2002 (Note 5). The television
stations described above are located in New York, Pennsylvania, Illinois,
Indiana, Missouri, Texas and Louisiana.

   Nexstar was organized as a limited liability company ("L.L.C.") on May 30,
2001 in the State of Delaware under a plan of reorganization for the purpose of
executing various financing transactions described in Note 9. On August 6,
2001, in connection with the reorganization, substantially all of the assets
and liabilities of Nexstar Finance Holdings II, L.L.C. ("Nexstar II"), except
those related to Nexstar Broadcasting Group, L.L.C., were transferred to
Nexstar. The reorganization has been accounted for as a combination of entities
under common control in a manner similar to a pooling of interests and,
accordingly, the financial statements for all periods have been restated to
reflect the exchange of members' interest.

   Nexstar is a wholly-owned subsidiary of Nexstar II, formerly known as
Nexstar Finance Holdings, L.L.C., which was organized as an L.L.C. on December
5, 2000 in the State of Delaware to execute the financing transactions
referenced above. Nexstar and Nexstar II are wholly-owned indirect subsidiaries
of Nexstar Broadcasting Group, L.L.C. ("Nexstar Broadcasting") which was
organized as an L.L.C. on December 12, 1996 in the State of Delaware. Nexstar
Broadcasting commenced operations on April 15, 1997.

   Television broadcasting is subject to the jurisdiction of the Federal
Communications Commission ("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 the stations, regulate the
equipment used by the stations, adopt regulations to carry out the provisions
of the Communications Act and impose penalties for the violation of such
regulations.
   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 the control of the
Company. The Company believes that, taken together, its current cash balances,
internally generated cash flow and availability under its credit facilities
should result in the Company having adequate cash resources to meet its debt
service and other financial obligations for at least the next twelve months.

2.  Summary of Significant Accounting Policies

Basis of Presentation

   The consolidated financial statements include the accounts of Nexstar, its
wholly-owned subsidiaries and Bastet Broadcasting, Inc. ("Bastet"), Mission
Broadcasting of Wichita Falls, Inc. ("Mission of Wichita Falls") and Mission of
Joplin (collectively, the "Company"). Bastet, Mission of Wichita Falls and
Mission of Joplin are special purpose entities (Note 4). All intercompany
accounts and transactions have been eliminated in consolidation.

   Unless otherwise noted, all dollars are in thousands.

                                      F-7

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


2.  Summary of Significant Accounting Policies--(Continued)

Use of Estimates

   The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and use assumptions that affect the reported
amounts of assets and liabilities and the disclosure for contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. The more significant
estimates made by management include those relating to the allowance for
doubtful accounts, the recoverability of broadcast program rights and the
useful lives of intangible assets. Actual results may vary from estimates used.

Cash and Cash Equivalents

   The Company considers all highly liquid investments in debt securities
purchased with an original maturity of ninety days or less to be cash
equivalents.

Concentration of Credit Risk

   Financial instruments which potentially expose the Company to a
concentration of credit risk consist principally of cash investments and
accounts receivable. The Company invests primarily in high quality debt
securities with original maturities of ninety days or less. Accordingly, these
investments are subject to minimal credit and market risk. The Company
maintained cash in excess of federally insured deposits at financial
institutions on December 31, 2001, 2000 and 1999. The Company does not believe
that such deposits are subject to any unusual credit risk beyond the normal
credit risk associated with operating its business. A significant portion of
the Company's accounts receivable are due from local and national advertising
agencies. Such accounts are generally unsecured. The Company has not
experienced significant losses related receivables from individual customers or
by geographical area. Additionally, the Company maintains reserves for
potential credit losses.

Revenue Recognition

   Advertising revenues, which include network compensation, are recognized in
the period during which the time spots are aired. Revenues from other sources,
which may include income from production and other similar activities from time
to time, are recognized in the period during which the goods or services are
provided.

Trade and Barter Transactions

   The Company trades certain advertising time for various goods and services.
These transactions are recorded at the estimated fair value of the goods or
services received. Revenue from trade transactions is recognized when
advertisements are broadcast and services or merchandise received are charged
to expense or capitalized when received or used.

   The Company barters advertising time for certain program material. These
transactions are recorded at management's estimate of the value of the
advertising time exchanged, which approximates the fair value of the program
material received. The value of advertising time exchanged is estimated by
applying average historical advertising rates for specific time periods

Broadcast Rights and Broadcast Rights Payable

   Broadcast rights, primarily in the form of syndicated programs and feature
film packages, are initially recorded at the amount paid or payable to program
suppliers for the limited right to broadcast the suppliers' programming and are
recorded when available for use. Broadcast rights are stated at the lower of
unamortized cost or net realizable value. Amortization is computed using the
straight-line method based on the license period or usage, whichever is
greater. The current portion of broadcast rights represents those rights
available for broadcast which will be amortized in the succeeding year.

                                      F-8

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


2.  Summary of Significant Accounting Policies--(Continued)

Property and Equipment

   Property and equipment is stated at cost or estimated fair value for
purchase business combinations and trade transactions at the date of
acquisition. Major renewals and betterments are capitalized and ordinary
repairs and maintenance are charged to expense in the period incurred.
Depreciation is computed on a straight-line basis over the estimated useful
lives of the assets ranging from 5 to 39 years.

Intangible Assets

   Intangible assets represent the estimated fair value of both identifiable
intangible assets and goodwill resulting from the acquisitions by the Company
(Note 3). Identifiable intangible assets include FCC licenses, network
affiliation agreements and commercial advertising contracts and are being
amortized on a straight-line basis over periods ranging from 1 to 15 years.
Goodwill is the excess of the purchase price over the fair market value of the
net assets acquired and is amortized over 40 years using the straight-line
method.

Long-Lived Assets

   The Company evaluates the recoverability of its tangible and intangible
assets whenever adverse events or changes in business climate indicate that the
expected undiscounted future cash flows from the related assets may be less
than previously anticipated. If the net book value of the related asset exceeds
the fair value of the asset, the carrying value would be reduced to its fair
value, which is measured as the present value of its expected future cash flows
and an impairment loss would be recognized. The Company did not recognize any
impairment loss for the years ended December 31, 2001, 2000 and 1999.

Debt Financing Costs

   Debt financing costs represent direct costs incurred to obtain long-term
financing and are amortized to interest expense over the term of the underlying
debt utilizing the effective interest method.

Derivatives and Hedging Activities

   In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which established new
guidelines for accounting and reporting for derivative instruments and hedging
activities. Subsequently, SFAS No. 133 was amended by the issuance of SFAS No.
137 and SFAS No. 138. These amendments modify the provisions and effective date
of SFAS No. 133. SFAS No. 133, as amended, is effective for all fiscal quarters
of all fiscal years beginning after June 15, 2000. The Company adopted SFAS No.
133 on January 1, 2001.

   The Company uses derivative financial instruments to reduce its cash flow
exposure to fluctuations in interest rates on its variable rate debt or to
hedge fair value changes attributable to changes in the benchmark interest rate
on its fixed rate debt. All derivatives are recognized on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether
a derivative is designated as part of a hedge transaction and, if it is, the
type of hedge transaction. The gains and losses on derivative instruments that
are reported in other comprehensive income are reclassified into earnings in
the periods in which earnings are affected by movements in the variable rates
on the debt agreements. The Company assesses, both at inception and on an
ongoing basis, whether the derivatives that

                                      F-9

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


2.  Summary of Significant Accounting Policies--(Continued)

are used in hedging transactions are highly effective in offsetting the changes
in cash flows or fair value of hedged items. No components of derivative
instruments' gains or losses are excluded from the assessment of hedge
effectiveness. The Company assesses hedge effectiveness on a quarterly basis
and records the derivative gain or loss related to the ineffective portion of
the derivative to current earnings. The ineffectiveness reported in current
earnings during the year ended December 31, 2001 was immaterial. If the Company
determines that the forecasted cash flows of the hedged item are no longer
probable of occurring, the Company discontinues hedge accounting for the
affected portion of the forecasted transaction, and any unrealized gain or loss
on the derivative contract related to the affected portion of the forecasted
transaction is recognized in current earnings.

   The Company adopted SFAS No. 133, as amended by SFAS No. 138, on January 1,
2001. At the time of adoption, the Company recorded approximately a $0.2
million liability to reflect the fair value of the interest rate swap
agreements in effect at the time of adoption in which the Company paid a fixed
rate and received a variable rate. The agreements were designated as a hedge of
the variable cash flow exposure on the Company's variable rate debt.
Correspondingly, the Company recorded a cumulative-effect adjustment of
approximately $0.2 million in accumulated other comprehensive loss in
accordance with the transition provisions of SFAS No. 133. Of the $0.2 million
recorded in accumulated other comprehensive loss, all of it was reclassified
into earnings for the year ended December 31, 2001. Of the $3.7 million net
derivative losses recorded in accumulated other comprehensive loss at December
31, 2001, all of it is expected to be reclassified into earnings within the
next 12 months pursuant to the Company's hedge of its variable rate debt.

Comprehensive Income

   SFAS No. 130, "Reporting Comprehensive Income," requires the display of
comprehensive income or loss and its components as part of the Company's full
set of financial statements. Comprehensive income or loss is comprised of net
income or loss and other comprehensive income or loss. Other comprehensive
income or loss includes certain changes in equity that are excluded from net
income, such as translation adjustments and unrealized holding gains and losses
on available-for-sale marketable securities and certain derivative instruments,
net of tax.

   Prior to January 1, 2001, the Company did not have any transactions that
qualified as comprehensive income or loss. Upon adoption of SFAS No. 133, on
January 1, 2001, the Company recorded other comprehensive loss of $0.2 million
to recognize the fair value of all derivatives that were designated as cash
flow hedging instruments of the Company's variable rate debt. As of December
31, 2001, the cumulative net unrealized losses recorded in other comprehensive
loss were $3.7 million.

Advertising Expense

   The cost of advertising is expensed as incurred. The Company incurred
advertising costs in the amount of $803, $1,450 and $923 for the years ended
December 31, 2001, 2000 and 1999, respectively.

Financial Instruments

   The carrying amount of cash and cash equivalents, accounts receivable,
broadcast rights payable, accounts payable and accrued expenses approximates
fair value due to their short-term nature. The fair value of derivative
financial instruments is obtained from financial institution quotes. The
interest rates on the Company's term loan and revolving credit facility are
adjusted regularly to reflect current market rates. Accordingly, the carrying
amount of the Company's term loan and revolving credit facility approximates
fair value. See Note 9 for fair value of fixed rate debt.

                                     F-10

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


2.  Summary of Significant Accounting Policies--(Continued)

Accounting for Income Taxes

   Nexstar is an L.L.C. that is treated as a partnership for income tax
purposes. No provision for income taxes is required by Nexstar as its income
and expenses are taxable to or deductible by its members. Bastet, Mission of
Wichita Falls and Mission of Joplin and certain wholly-owned corporate
subsidiaries of Nexstar are subject to income taxes and account for income
taxes under the asset and liability method which requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and tax basis of assets and
liabilities.

Recently Issued Accounting Pronouncements

   In July 2001, the FASB issued SFAS No. 141, "Business Combinations," and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141
prospectively prohibits the pooling of interest method of accounting for
business combinations initiated after June 30, 2001. SFAS No. 142 requires
companies to cease amortizing goodwill and certain other intangible assets
including FCC licenses. The amortization of existing goodwill and FCC licenses
will cease on December 31, 2001. Any goodwill and FCC licenses resulting from
acquisitions completed after June 30, 2001 will not be amortized. SFAS No. 142
also establishes a new method of testing goodwill and FCC licenses for
impairment on an annual basis or on an interim basis if an event occurs or
circumstances change that would reduce the fair value of a reporting unit below
its carrying value. The adoption of SFAS No. 142 will result in the Company's
discontinuation of amortization of its goodwill and FCC licenses; however, the
Company will be required to test its goodwill and FCC licenses for impairment
under the new standard during 2002, which could have an adverse effect on the
Company's future results of operations if an impairment occurs. The Company is
currently in the process of assessing the impact of SFAS No. 142, including how
it will measure impairment for goodwill and FCC licenses, however it has not
yet had sufficient time to complete such evaluation. During the year ended
December 31, 2001, the Company incurred goodwill amortization expense of $3.6
million and incurred amortization expense related to its broadcast licenses of
$5.2 million. As a result of implementing SFAS No. 142, the Company's net
income will not be impacted by amortization expense related to goodwill or FCC
licenses.

   In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets," which is effective January 1, 2002. SFAS No.
144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," and the accounting and
reporting provisions relating to the disposal of a segment of a business
described in Accounting Principles Board Opinion ("APB") No. 30. The Company
does not expect that the adoption of SFAS No. 144 will have a material impact
on its financial statements.

3.  Acquisitions

   During 2001, 2000, and 1999, the Company made the acquisitions set forth
below, each of which has been accounted for under the purchase method and,
accordingly, the purchase price was allocated to assets acquired and
liabilities assumed based on their estimated fair value on the acquisition
date. The consolidated financial statements include the operating results of
each business from the date of acquisition.

The WCIA-TV/WCFN-TV and WMBD-TV Acquisition

   On January 12, 2001, Nexstar acquired substantially all of the assets of
WCIA-TV/WCFN-TV and WMBD-TV from Midwest Television, Inc. ("Midwest") for
approximately $108.0 million, exclusive of transaction costs. Included in the
purchase price was $0.5 million, which was paid directly to the owner of
Midwest for the

                                     F-11

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


3.  Acquisitions--(Continued)

building that houses WCIA-TV. The acquisition has been accounted for under the
purchase method and, accordingly, the purchase price was allocated to assets
acquired and liabilities assumed based on their estimated fair value on the
acquisition date. The excess of the consideration paid over the estimated fair
value of the tangible and identifiable intangible assets acquired approximated
$36.6 and is being amortized using the straight-line method over 40 years. TBA
fees in the amount of $2.25 million were paid to Midwest at the time of closing.

The KTAL-TV Acquisition

   On November 1, 2000, Nexstar acquired substantially all of the assets of
KTAL-TV from KCMC, Inc. for approximately $35.3 million, exclusive of
transaction costs. The excess of the consideration paid over the estimated fair
market value of the tangible net assets and identifiable intangible assets
approximated $4.3 million and is being amortized using the straight-line method
over 40 years.

The KMID-TV Acquisition

   On September 21, 2000, Nexstar acquired substantially all the assets of
KMID-TV from Gocom Holdings, LLC for approximately $10.0 million, exclusive of
transaction costs. The consideration paid approximated the estimated fair
market value of the tangible net assets and identifiable intangible assets
acquired. As such, no goodwill has been recorded.

The WROC-TV Acquisition

   In 1999, Nexstar acquired substantially all of the assets of WROC-TV from
STC Broadcasting, Inc. for approximately $46.0 million, exclusive of
transaction costs. The excess of the consideration paid over the estimated fair
market value of the tangible net assets and identifiable intangible assets
acquired approximated $1.2 million and is being amortized using the
straight-line method over 40 years.

The KTAB-TV Acquisition

   In 1999, Nexstar acquired substantially all of the assets of KTAB-TV from
Shooting Star Broadcasting, LP for approximately $17.3 million, exclusive of
transaction costs. The excess of the consideration paid over the estimated fair
market value of the tangible net assets and identifiable intangible assets
acquired approximated $4.6 million and is being amortized using the
straight-line method over 40 years.

The KJTL-TV and KJBO-TV Acquisition

   On June 1, 1999, Mission acquired substantially all of the assets of KJTL-TV
and KJBO-TV from Wicks Broadcast Group, LP for approximately $15.5 million,
exclusive of transaction costs. The excess of the consideration paid over the
estimated fair market value of the tangible net assets and identifiable
intangible assets acquired approximated $3.9 million and is being amortized
using the straight-line method over 40 years.

                                     F-12

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


3.  Acquisitions--(Continued)

   The selected unaudited pro forma consolidated information for the years
ended December 31, 2001, 2000 and 1999, determined as if the acquisitions
described above occurred on January 1 of the prior year, would have resulted in
the following:

<TABLE>
<CAPTION>
                                      December 31, 2001/(1)/   December 31, 2000     December 31, 1999
-                                     --------------------   --------------------  --------------------
                                      As Reported  Pro Forma As Reported Pro Forma As Reported Pro Forma
                                      -----------  --------- ----------- --------- ----------- ---------
<S>                                   <C>          <C>       <C>         <C>       <C>         <C>
Revenues (excluding trade and barter)  $114,474    $114,474   $124,631   $133,240   $ 91,058   $110,063
Total net revenues...................   110,729     110,729    117,467    124,743     86,959    103,874
Income (loss) from operations........        62          62     18,570     19,207      5,508      6,542
Net loss.............................  $(38,319)   $(38,319)  $ (2,523)  $ (8,496)  $(14,249)  $(22,360)
</TABLE>
--------
(1) The December 31, 2001 pro forma amounts do not include the results of
    Midwest for the twelve days prior to acquisition on January 12, 2001.
    Amounts deemed de minimus.

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

4.  Special Purpose Entities

   Bastet, Mission of Wichita Falls and Mission of Joplin are separate entities
100% owned by an independent third party. Collectively, these entities own,
operate and program the following television stations: WYOU-TV, WFXP-TV,
KJTL-TV, and KJBO-TV. Through a TBA, Mission of Joplin provides most of the
programming and administrative services for KODE-TV pending the purchase of its
assets in September 2002. Nexstar does not own or control the television
stations, but it has entered into various management and service arrangements
with all of the stations, except KODE-TV (Note 1). In addition to providing
certain services to the television stations, Nexstar is also guarantor of
Bastet's and both Missions' combined debt (Note 9). Additionally, the owner has
granted to Nexstar a purchase option on each entity to acquire the assets and
liabilities of each entity for consideration equal to the indebtedness of the
entity as defined in the option agreement. Pursuant to Emerging Issues Task
Force Topic D-14, "Transactions Involving Special Purpose Entities," Bastet,
Mission of Wichita Falls and Mission of Joplin satisfy the definition of
special purpose entities and as such Nexstar is considered a sponsor of them.
Accordingly, the financial results of operations of these entities have been
consolidated with those of Nexstar in these consolidated financial statements.
Because the relevant entities have a net asset deficit and there is no binding
obligation on the minority party to make good on the deficit, minority interest
in the results of operations and share of net assets have not been recognized.

5.  Time Brokerage and Outsourcing Agreements

   In 2001, 2000 and 1999, the Company had the following arrangements:

The KODE-TV Arrangement

   On December 31, 2001 Mission of Joplin entered into a TBA with a subsidiary
of Gocom Holdings, LLC, current owner of KODE-TV. In September 2002, Mission of
Joplin will purchase substantially all of the assets of the station for $14.0
million. Pursuant to the terms of the agreement, Mission of Joplin has made a
down payment of $6.0 million against the purchase price, which is included in
other noncurrent assets on the balance sheet. Mission of Joplin will make TBA
payments of $35 per month to Gocom Holdings, LLC through September 2002.

                                     F-13

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


5.  Time Brokerage and Outsourcing Agreements--(Continued)

The WYZZ-TV Arrangement

   Effective December 1, 2001, Nexstar entered into an outsourcing agreement
with a subsidiary of Sinclair Broadcast Group, Inc. to provide certain
engineering, production, sales and administrative services for WYZZ-TV, a Fox
affiliate in Peoria, IL. The parties will share the combined broadcast cash
flow generated by WYZZ-TV and WMBD-TV. The agreement is non-cancelable until
May 2003 and expires in December 2008.

The KMID-TV Arrangement

   In 2000, Nexstar entered into a TBA with a subsidiary of Gocom Holdings, LLC
to program KMID-TV. Under the TBA Nexstar paid fees to the previous owner until
the acquisition was completed. Fees of $60 were paid during the TBA period.

The KTAB-TV Arrangement

   In 1999, Nexstar entered into a TBA with Shooting Star Broadcasting, LP to
program KTAB-TV. Under the TBA, Nexstar accrued fees to the previous owner
until the acquisition was completed. Fees of $203 were paid on the acquisition
date.

The WROC-TV Arrangement

   In 1999, Nexstar entered into a TBA with STC Broadcasting, Inc. to program
WROC-TV. Under the TBA, Nexstar paid fees to the previous owner until the
acquisition was completed. Fees of $175 were paid during the TBA period.

The WCIA-TV/WCFN-TV and WMBD-TV Arrangement

   In 1999, Nexstar entered into a TBA with Midwest Television, Inc.
("Midwest") to program WCIA-TV/WCFN-TV and WMBD-TV. On January 12, 2001,
Nexstar purchased the assets of the stations for approximately $108.0 million
at which time the TBA terminated. A TBA fee of $2.25 million was paid at
closing. Nexstar accrued the fee over the term of the agreement at a rate of
$125 per month.

6.  Related Party Transactions

Guaranty--Chief Executive Officer

   Pursuant to a continuing guaranty agreement dated June 16, 2001 with the
Company's primary lender, the Company has entered into an agreement to
guarantee a $3.0 million nonrevolving line of credit to its President and Chief
Executive Officer to enable him to purchase equity units of the Company. The
line of credit is full-recourse to the officer and is available until December
31, 2004.

Management Services Agreement

   The Company paid management and consulting fees to ABRY Partners LLC
("ABRY"). For the years ended December 31, 2000 and 1999, the Company incurred
$276 and $265, respectively, of management and consulting fees which are
included in selling, general and administrative expenses. Effective December
31, 2000 ABRY terminated its management services agreement with the Company.

Bridge Loan

   The Company received a bridge loan by one of the ABRY partnerships in
conjunction with the Company's acquisition of WROC-TV in 1999. The principal
amount of $14.5 million and accrued interest thereon, was due on May 31, 2000.
The outstanding amount was paid in full on May 12, 2000. Interest accrued
annually at a rate of 9.0%. The Company recorded $454 and $784 of interest
expense for the years ended December 31, 2000 and 1999, respectively.

                                     F-14

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


7.  Property and Equipment

<TABLE>
<CAPTION>
                                           Estimated      December 31,
                                          useful life  ------------------
                                            (years)      2001      2000
                                         ------------- --------  --------
     <S>                                 <C>           <C>       <C>
     Buildings and building improvements      39       $ 15,841  $ 13,298
     Land and land improvements.........    N/A-39        2,738     2,750
     Leasehold improvements............. term of lease    1,523     1,212
     Studio equipment...................      5-7        33,181    32,245
     Transmission equipment.............     5-15        27,800    20,128
     Office equipment and furniture.....      5-7         5,122     3,833
     Vehicles...........................       5          4,241     3,281
     Construction in progress...........      N/A           724       308
                                                       --------  --------
                                                         91,170    77,055
     Less: accumulated depreciation.....                (33,787)  (21,711)
                                                       --------  --------
     Property and equipment, net of
       accumulated depreciation.........               $ 57,383  $ 55,344
                                                       ========  ========
</TABLE>

8. Intangible Assets

<TABLE>
<CAPTION>
                                        Estimated      December 31,
                                       useful life  ------------------
                                         (years)      2001      2000
                                       ------------ --------  --------
        <S>                            <C>          <C>       <C>
        Goodwill......................      40      $ 99,097  $ 66,448
        Network affiliation agreement.      15       171,957   129,639
        FCC license...................      15        77,113    57,019
        Debt financing costs.......... term of debt   17,488       594
        Other intangibles.............     1-15        7,104     5,788
                                                    --------  --------
                                                     372,759   259,488
        Less: accumulated amortization               (59,479)  (39,008)
                                                    --------  --------
        Intangible assets, net of
          accumulated amortization....              $313,280  $220,480
                                                    ========  ========
</TABLE>

9.  Debt

   Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                       December 31,
                                                    ------------------
                                                      2001      2000
                                                    --------  --------
         <S>                                        <C>       <C>
         Term loans................................ $ 82,000  $119,500
         Revolving credit facilities...............   46,143   133,972
         Senior subordinated notes, net of discount  154,097        --
         Senior discount notes, net of discount....   20,802        --
         SFAS No. 133 hedge accounting adjustment..    1,590        --
                                                    --------  --------
                                                     304,632   253,472
         Less: current portion.....................     (488)  (11,125)
                                                    --------  --------
                                                    $304,144  $242,347
                                                    ========  ========
</TABLE>

                                     F-15

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


9.  Debt--(Continued)

The Nexstar Senior Secured Credit Facility

   On January 12, 2001, Nexstar entered into a senior secured credit facility
with a group of commercial banks. The terms of the credit agreement provided
for a revolving credit facility (the "Nexstar revolver") in the amount of
$122.0 million and a term loan facility (the "Nexstar term loan") in the amount
of $110.0 million. The revolving credit facility was subsequently reduced to
$72.0 million after the issuance of the Senior Subordinated Notes discussed
below. The credit facility was subsequently amended on June 14, 2001 to allow
for a $50.0 million Term A facility, a $75.0 million Term B facility and a
$57.0 million revolving facility. On November 14, 2001, the credit facility was
amended to adjust certain financial covenants effective for the period ended
September 30, 2001 and future periods and to reduce the revolving facility to
$42.0 million. Prepayments were made under the Term A facility, which
effectively reduced the commitment to $32.0 million. Interest rates associated
with the Nexstar revolver and term loans are based, at the option of the
Company, on the prevailing prime rate plus an applicable margin or the LIBOR
rate plus an applicable margin, as defined (ranging from 5.65% to 6.64% at
December 31, 2001). Interest is fixed for a period ranging from one month to 12
months, depending on availability of the interest basis selected, except if the
Company selects a prime-based loan, in which case the interest rate will
fluctuate during the period as the prime rate fluctuates. Interest is payable
periodically based on the type of interest rate selected. In addition, the
Company is required to pay quarterly commitment fees based on the Company's
leverage ratio for that particular quarter on the unused portion of the Nexstar
revolver loan commitment. The Nexstar term loans are subject to scheduled
mandatory repayments beginning in 2002 and the Nexstar revolver is subject to
scheduled mandatory reductions commencing in 2003. Any excess amount
outstanding at the time of a mandatory reduction is payable at that time. The
borrowings under the Nexstar senior secured credit facility are guaranteed,
jointly and severally, by Nexstar Broadcasting, Bastet, Mission of Wichita
Falls and Mission of Joplin, and by each existing and subsequently acquired or
organized subsidiary.

The Bastet/Mission Senior Secured Credit Facility

   On January 12, 2001, Bastet and Mission of Wichita Falls, Inc. entered into
a credit agreement (the "Bastet/Mission credit facility") with a group of
commercial banks. The terms provided for the banks to make revolving loans to
Bastet and Mission of Wichita Falls not to exceed the aggregate commitment of
$43.0 million.

   On November 14, 2001, the credit facility was amended to increase the
revolving facility to $58.0 million and to include Mission of Joplin as a
borrower. Bastet and both Missions are jointly and severally liable for the
outstanding amount of the loan. Nexstar has entered into a guarantor agreement,
whereby Nexstar guarantees full payment of any obligations outstanding in the
event of default. Interest rates associated with the Bastet/Mission credit
facility are based, at the option of Bastet and both Missions, on the
prevailing prime rate plus an applicable
margin or the LIBOR rate plus an applicable margin, as defined (ranging from
5.23% to 5.40% at December 31, 2001). Interest is fixed for a period ranging
from one month to 12 months, depending on availability of the interest basis
selected, except if Bastet or either Mission selects a prime-based loan, in
which case the interest rate will fluctuate during the period as the prime rate
fluctuates. Interest is payable periodically based on the type of interest rate
selected. In addition, Bastet and both Missions are required to pay quarterly
commitment fees based on the Company's leverage ratio for that particular
quarter on the unused portion of the Bastet/Mission credit facility loan
commitment. The Bastet/Mission credit facility is due and payable on the
maturity date, January 12, 2007.

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

                                     F-16

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


9.  Debt--(Continued)

   On June 1, 1999, the existing Nexstar credit agreements were amended and
restated to include a term loan for an aggregate maximum amount of $125.0
million, a revolving credit facility of $80.0 million and an available
incremental revolving credit facility not to exceed $75.0 million. On January
12, 2001, the debt outstanding was repaid with the proceeds of the senior
secured credit facility described above.

   On June 1, 1999, the Bastet and Mission of Wichita Falls existing credit
facility was amended to increase the aggregate maximum amount to $45.0 million
and to include Mission as a co-borrower. On January 12, 2001, the debt
outstanding was repaid with the proceeds of the senior secured credit facility
described above.

Senior Subordinated Notes

   On March 16, 2001, Nexstar Finance, L.L.C., a wholly-owned subsidiary of
Nexstar, issued $160.0 million of 12.0% Senior Subordinated Notes (the "notes")
at a price of 96.012%. The notes mature on April 1, 2008. Interest is payable
every six months in arrears on April 1 and October 1. The notes are guaranteed
by all of the domestic existing and future restricted subsidiaries of the
Company. They are general unsecured senior subordinated obligations
subordinated to all of the Company's senior debt. The notes are redeemable on
or after April 1, 2004 with the net cash proceeds from qualified equity
offerings. The discount on the notes is amortized to interest expense over the
term of the notes.

   The proceeds of the offering were used to partially refinance existing
indebtedness of the Company and fund working capital needs.

Senior Discount Notes

   On May 17, 2001, the Company issued $36.988 million principal amount at
maturity of Senior Discount Notes (the "discount notes") at a price of
54.0373%. The discount notes mature on May 15, 2009. Each discount note will
have an accreted value at maturity of $1,000. The discount notes will begin to
accrue cash interest until May 15, 2005 with payments to be made every six
months in arrears on May 15 and November 15. They are general unsecured senior
obligations effectively subordinated to all of the Company's senior secured
debt and are structurally subordinated to the notes described above. The
discount on the discount notes is amortized to interest expense over the term
of the notes.

Registration

   In January 2002 and September 2001, the discount notes and notes,
respectively, were registered under the Securities Act of 1933 pursuant to a
registration rights agreement.

   The fair value of the Company's fixed rate debt is estimated based on quoted
market prices for the same or similar issue, or on the current rates offered to
the Company for debt of the same remaining maturities. The carrying amounts and
fair value of fixed rate debt were as follows:


<TABLE>
<CAPTION>
                                          December 31,
                                              2001
                                          ------------
                          <S>             <C>
                          Carrying amount   $174,899
                          Fair value.....    182,402
</TABLE>

                                     F-17

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


9.  Debt--(Continued)

   At December 31, 2001, scheduled maturities of the Company's debt
(undiscounted) are summarized as follows:


<TABLE>
                  <S>                                 <C>
                  2002............................... $    488
                  2003...............................    2,567
                  2004...............................    3,845
                  2005...............................    5,337
                  2006...............................    6,402
                  Thereafter.........................  306,492
                                                      --------
                                                      $325,131
                                                      ========
</TABLE>

Debt Covenants

   The bank debt agreements, notes and discount notes contain covenants which
require the Company to comply with certain financial ratios, capital
expenditure and cash film payments and other limits. Covenants are formally
calculated quarterly and are prepared on a consolidated basis. The Company was
in compliance with all covenants at December 31, 2001, 2000 and 1999.

Debt Financing Costs

   In conjunction with the amendment and restatement of the credit facility
during 1999 and the modification of the credit facility during 2001, the
Company expensed $2.8 million and $0.3 million, respectively, related to
certain debt financing costs. The amount, net of tax benefit, has been
presented as an extraordinary item.

Interest Rate Swap Agreements

   At December 31, 2001, the Company had in effect two interest rate swap
agreements to pay fixed and receive variable interest rates as required by its
credit facility agreements, with notional amounts of $93.3 million and $20.0
million, respectively, and one swap agreement to pay a variable rate and
receive a fixed rate with a notional amount of $60.0 million. The $93.3 million
notional swap, while economically being used to hedge the variability of cash
flows on a portion of the Company's variable rate debt, does not qualify for
SFAS No. 133 hedge accounting and, thus, is being recorded on the balance sheet
at fair value with changes in fair value each period reported in other income
and expense. The remaining agreements are designated as hedges of either the
variability of cash flows on variable rate debt or the fair value change of the
fixed rate debt attributable to changes in the benchmark interest rate. The
differential to be paid or received on the swaps is accrued as an adjustment to
interest expense. The net fair value of the interest rate swap agreements
representing the cash the Company would pay to settle the agreements was
approximately $2.4 million and $0.2 million at December 31, 2001 and December
31, 2000, respectively.

Unsecured Interim Loan

   On January 12, 2001, the Company received an unsecured interim loan by its
primary lender (the "interim loan") in the amount of $40.0 million. The
interest rate was 13.5% through April 12, 2001 at which time it increased to
14.0%. In conjunction with the offering of the notes described above, $30.0
million of the interim loan was repaid. The remaining $10.0 million plus
accrued interest was repaid with the proceeds from the discount notes described
above.

                                     F-18

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


9.  Debt--(Continued)

Note Payable

   A note payable for $4.5 million was issued by the Company as part of the
consideration for the acquisition of KFDX-TV, KBTV-TV and KSNF-TV from US
Broadcast Group, LLC in 1998. The noninterest-bearing note required payments of
$1.0 million and $2.5 million on December 31, 2000 and 1999, respectively. The
unamortized discount was calculated using an interest rate of 7.5%, which
approximated the Company's incremental borrowing rate for similar debt at the
time of acquisition. The amount remaining outstanding was paid in full on
December 31, 2000.

10.  Member's Interest

   The Company is 100% owned and controlled by one member, Nexstar II (Note 1).

   On January 12, 2001, Nexstar received $65.0 million in capital contributions
from Nexstar II, (known then as Nexstar Finance Holdings, L.L.C.). On May 17,
2001, concurrent with the funding from the discount notes, $8.0 million was
distributed back to Nexstar II and $1.25 million was received in capital
contributions. On August 7, 2001 and November 14, 2001, Nexstar received $20.0
million and $15.0 million, respectively, in capital contributions from Nexstar
II, the proceeds of which were used to reduce bank debt.

11.  Income Taxes

   The provision for income taxes charged to continuing operations was as
follows at December 31:

<TABLE>
<CAPTION>
                                                2001   2000    1999
                                                ----  -------  -----
          <S>                                   <C>   <C>      <C>
          Current tax (expense) benefit:
             Federal........................... $307  $(1,131) $(662)
             State.............................  (95)    (516)  (158)
                                                ----  -------  -----
                                                 212   (1,647)  (820)
                                                ----  -------  -----
          Deferred tax (expense) benefit:
             Federal...........................  539      447    507
             State.............................  128      102   (345)
                                                ----  -------  -----
                                                 667      549    162
                                                ----  -------  -----
                 Net tax (expense) benefit..... $879  $(1,098) $(658)
                                                ====  =======  =====
</TABLE>

   The provision for income taxes is different than the amount computed using
the applicable statutory federal income tax rate for the years ended December
31 with the differences summarized below:

<TABLE>
<CAPTION>
                                                                     2001     2000     1999
                                                                   --------  -------  -------
<S>                                                                <C>       <C>      <C>
Tax benefit at statutory rates.................................... $ 13,627  $ 1,831  $ 4,982
Change in valuation allowance.....................................   (1,947)  (1,301)  (1,296)
Income earned by a partnership not subject to corporate income tax  (10,906)  (1,376)  (4,012)
State and local taxes, net of federal benefit.....................      348      (21)    (128)
Other, net........................................................     (243)    (231)    (204)
                                                                   --------  -------  -------
Net tax (expense) benefit......................................... $    879  $(1,098) $  (658)
                                                                   ========  =======  =======
</TABLE>

                                     F-19

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


11.  Income Taxes--(Continued)
   The components of the net deferred tax liability are as follows at December
31:

<TABLE>
<CAPTION>
                                            2001     2000     1999
                                           -------  -------  -------
          <S>                              <C>      <C>      <C>
          Net operating loss carryforwards $(5,341) $(3,818) $(2,307)
          Property and equipment..........   1,966    2,243    2,327
          Intangible assets...............   4,570    5,385    5,650
          Other...........................    (129)    (130)    (141)
          Valuation allowance.............   5,550    3,603    2,302
                                           -------  -------  -------
          Net deferred tax liability...... $ 6,616  $ 7,283  $ 7,831
                                           =======  =======  =======
</TABLE>

   At December 31, 2001, the Company has federal and state net operating loss
carryforwards available of approximately $12.6 million and $15.7 million,
respectively, to reduce future taxable income. These net operating losses begin
to expire in 2008 if not utilized.

   The Company has provided a valuation allowance for certain deferred tax
assets. The allowance relates to the generation of net operating losses and
other deferred tax assets of certain corporate subsidiaries, the benefit of
which may not be realized.

   A corporation that undergoes a "change of ownership" pursuant to section 382
of the Internal Revenue Code is subject to limitations on the amount of its net
operating loss carryforwards which may be used in the future. An ownership
change occurred with regard to one subsidiary on April 15, 1997. The amount of
the net operating loss at December 31, 2001 associated with that subsidiary was
approximately $1.1 million. The annual limitation on the use of the net
operating loss is approximately $446. The Company estimates the limitation on
the net operating loss will not have a material adverse impact on the Company's
financial position or results of operation. No assurance can be given that an
ownership change will not occur as a result of other transactions entered into
by the Company, or by certain other parties over which the Company has no
control. If a "change in ownership" for income tax purposes occurs, the
Company's ability to use "pre-change losses" could be postponed or reduced,
possibly resulting in accelerated or additional tax payments which, with
respect to tax periods beyond 2001, could have a material adverse impact on the
Company's financial position or results of operations.

12.  Commitments and Contingencies

Broadcast Rights Commitments

   Broadcast rights acquired for cash and barter under license agreements are
recorded as an asset and a corresponding liability at the inception of the
license period. Future minimum payments arising from unavailable current and
future broadcast license commitments outstanding are as follows at December 31,
2001:

<TABLE>
     <S>                                                           <C>
     2002......................................................... $ 3,800
     2003.........................................................   4,472
     2004.........................................................   2,513
     2005.........................................................     885
     Thereafter...................................................      --
                                                                   -------
     Future minimum payments for unavailable cash broadcast rights $11,670
                                                                   =======
</TABLE>

                                     F-20

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


12.  Commitments and Contingencies--(Continued)

   Unavailable broadcast rights commitments represent obligations to acquire
cash and barter program rights for which the license period has not commenced
and, accordingly, for which no asset or liability has been recorded.

Digital Conversion

   FCC regulations require the Company to commence digital operations by May 1,
2002, in addition to continuing the Company's analog operations, unless an
extension of time is granted. We have requested an extension of time to begin
digital operations at all of the stations except WCIA-TV and WCFN-TV which are
scheduled to meet the deadline. Although there can be no assurance that the FCC
will so act, the Company anticipates that the FCC will grant the extension. The
digital conversion will require an average initial capital investment of $0.25
million per station for low-power transmission of digital signal programming
and an average additional capital expenditure of $0.75 million per station for
full-power transmission modifications. Except for the capital invested in
WCFN-TV to make it a full-power broadcasting station, there were no
expenditures for digital conversion in 2001. The Company anticipates that
digital expenditures will be funded through available cash on hand and cash
generated from operations.

Operating and Capital Leases

   The Company leases office space, vehicles, antennae sites, studio and other
operating equipment under noncancelable capital and operating lease
arrangements expiring through 2007. Charges to operations for such leases
aggregated $584, $643 and $504 for the years ended December 31, 2001, 2000 and
1999, respectively. Future minimum lease payments under these leases are as
follows at December 31, 2001:

<TABLE>
<CAPTION>
                                                  Capital    Operating
                                                   lease       lease
                                                obligations obligations
                                                ----------- -----------
        <S>                                     <C>         <C>
        2002...................................     $23       $  441
        2003...................................      --          426
        2004...................................      --          354
        2005...................................      --          213
        2006...................................      --          207
        Thereafter.............................      --          448
                                                    ---       ------
                                                    $23       $2,089
                                                    ===       ======
        Less: amount representing interest.....       1
                                                    ---
        Present value of minimum lease payments     $22
                                                    ===
</TABLE>

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, the ultimate liability
with respect to these claims will not have a material adverse effect on the
financial statements of the Company.

                                     F-21

<PAGE>

                       NEXSTAR FINANCE HOLDINGS, L.L.C.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


13.  Employment Matters

   As of December 31, 2001, the Company had a total of 1,027 employees
comprised of 891 full-time and 136 part-time or temporary employees. As of
December 31, 2001, 214 of the Company's employees are covered by collective
bargaining agreements. The Company believes that employee relations are
satisfactory, and the Company has not experienced any work stoppages at any of
its facilities. However, there can be no assurance that the Company's
collective bargaining agreements will be renewed in the future or that the
Company will not experience a prolonged labor dispute, which could have a
material adverse effect on the Company's business, financial condition, or
results of operations.

   The Company has established a retirement savings plan under Section 401(k)
of the Internal Revenue Code (the "Plan"). The Plan covers substantially all
employees of the Company who meet minimum age and service requirements, and
allows participants to defer a portion of their annual compensation on a
pre-tax basis. Contributions to the Plan may be made at the discretion of the
Company. Through December 31, 2001, the Company had not elected to make such
contibutions, except where required to do so under the terms of specific union
labor contracts. Mandatory amounts contributed pursuant to labor contracts were
$0, $26 and $25 during the years ended December 31, 2001, 2000 and 1999,
respectively.

14.  Nexstar Finance Holdings, Inc.

   Nexstar Finance Holdings, Inc., a wholly-owned subsidiary of Nexstar, was
incorporated on December 5, 2000 in the State of Delaware for the purpose of
facilitating future financings. Nexstar Finance Holdings, Inc. was capitalized
with an immaterial amount of equity and had no operating activities for the
year ended December 31, 2001 and 2000.

15.  Valuation and Qualifying Accounts

Allowance for Doubtful Accounts Rollforward

<TABLE>
<CAPTION>
                                                         Balance at  Charged
                                                         Beginning      to                 Balance at
                                                         of period  Operations Deductions End of Period
                                                         ---------- ---------- ---------- -------------
<S>                                                      <C>        <C>        <C>        <C>
   Year ended December 31, 1999--Allowance for doubtful
     accounts...........................................    $344       $214      $(206)       $352
   Year ended December 31, 2000--Allowance for doubtful
     accounts...........................................     352        346       (283)        415
   Year ended December 31, 2001--Allowance for doubtful
     accounts...........................................     415        438       (363)        490
</TABLE>

                                     F-22

<PAGE>

<TABLE>
<CAPTION>
Exhibit
  No.                                               Exhibit Index
-------                                             -------------
<C>     <S>
  3.1.. Certificate of Formation of NBG, L.L.C. (Incorporated by reference to Exhibit 3.1 to Registration
        Statement on Form S-4 (File No. 333-68964) filed by Nexstar Finance Holdings, L.L.C. and Nexstar
        Finance Holdings, Inc.)
  3.2   Certificate of Amendment to the Certificate of Formation of NBG, L.L.C. (Incorporated by reference
        to Exhibit 3.2 to Registration Statement on Form S-4 (File No. 333-68964) filed by Nexstar Finance
        Holdings, L.L.C. and Nexstar Finance Holdings, Inc.)
  3.3   Limited Liability Company Agreement of NBG, L.L.C. (Incorporated by reference to Exhibit 3.3 to
        Registration Statement on Form S-4 (File No. 333-68964) filed by Nexstar Finance Holdings, L.L.C.
        and Nexstar Finance Holdings, Inc.)
  3.4   Amendment No. 1 to the Limited Liability Company Agreement of NBG, L.L.C. (Incorporated by
        reference to Exhibit 3.4 to Registration Statement on Form S-4 (File No. 333-68964) filed by
        Nexstar Finance Holdings, L.L.C. and Nexstar Finance Holdings, Inc.)
  3.5   Articles of Incorporation of Nexstar Finance Holdings, Inc. (Incorporated by reference to Exhibit 3.5
        to Registration Statement on Form S-4 (File No. 333-68964) filed by Nexstar Finance Holdings,
        L.L.C. and Nexstar Finance Holdings, Inc.)
  3.6   By-laws of Nexstar Finance Holdings, Inc. (Incorporated by reference to Exhibit 3.6 to Registration
        Statement on Form S-4 (File No. 333-68964) filed by Nexstar Finance Holdings, L.L.C. and Nexstar
        Finance Holdings, Inc.)
  4.1   Indenture, among Nexstar Finance Holdings, L.L.C., Nexstar Finance Holdings, Inc., Bastet
        Broadcasting, Inc., Mission Broadcasting of Wichita Falls, Inc., Nexstar Broadcasting Group, L.L.C.
        and The Bank of New York, as successor to United States Trust Company of New York, dated as of
        May 17, 2001. (Incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-4 (File
        No. 333-68964) filed by Nexstar Finance Holdings, L.L.C. and Nexstar Finance Holdings, Inc.)
  4.2   Supplemental Indenture, among Nexstar Finance Holdings, L.L.C., Nexstar Finance Holdings, Inc.,
        Nexstar Finance Holdings II, L.L.C. and The Bank of New York, dated August 6, 2001.
        (Incorporated by reference to Exhibit 4.2 to Registration Statement on Form S-4 (File No. 333-
        68964) filed by Nexstar Finance Holdings, L.L.C. and Nexstar Finance Holdings, Inc.)
  4.3   Form of exchange note (Included in Exhibit 4.1 hereto.) (Incorporated by reference to Exhibit 4.3 to
        Registration Statement on Form S-4 (File No. 333-68964) filed by Nexstar Finance Holdings, L.L.C.
        and Nexstar Finance Holdings, Inc.)
  4.4   Registration Rights Agreement, by and among Nexstar Finance Holdings, L.L.C., Nexstar Finance
        Holdings, Inc., Banc of America Securities LLC and Barclays Capital Inc. dated as of May 17, 2001.
        (Incorporated by reference to Exhibit 4.4 to Registration Statement on Form S-4 (File No. 333-
        68964) filed by Nexstar Finance Holdings, L.L.C. and Nexstar Finance Holdings, Inc.)
 10.1   Purchase Agreement, by and among Nexstar Finance Holdings, L.L.C., Nexstar Finance Holdings,
        Inc., Nexstar Equity Corp., Nexstar Broadcasting Group, L.L.C., Banc of America Securities LLC
        and Barclays Capital Inc., dated as of May 14, 2001. (Incorporated by reference to Exhibit 10.1 to
        Registration Statement on Form S-4 (File No. 333-68964) filed by Nexstar Finance Holdings, L.L.C.
        and Nexstar Finance Holdings, Inc.)
 10.2   Unit Agreement, among Nexstar Finance Holdings, L.L.C., Nexstar Finance Holdings, Inc., Nexstar
        Equity Corp., Nexstar Broadcasting Group, L.L.C. and The Bank of New York, as successor to
        United States Trust Company of New York, dated as of May 17, 2001. (Incorporated by reference to
        Exhibit 10.2 to Registration Statement on Form S-4 (File No. 333-68964) filed by Nexstar Finance
        Holdings, L.L.C. and Nexstar Finance Holdings, Inc.)
 10.3   Reimbursement Agreement, between Nexstar Equity Corp. and Nexstar Broadcasting Group, L.L.C.,
        dated as of May 17, 2001. (Incorporated by reference to Exhibit 10.3 to Registration Statement on
        Form S-4 (File No. 333-68964) filed by Nexstar Finance Holdings, L.L.C. and Nexstar Finance
        Holdings, Inc.)
</TABLE>

                                      E-1

<PAGE>

<TABLE>
<CAPTION>
Exhibit
  No.                                               Exhibit Index
-------                                             -------------
<C>     <S>

 10.4   First Amendment to Amended and Restated Credit Agreement and Limited Consent dated as of
        November 14, 2001, among Nexstar Finance, L.L.C., Bank of America, N.A. and the other parties
        signatory thereto.

 10.5   Amended and Restated Credit Agreement, dated as of June 14, 2001, by and among Nexstar
        Finance, L.L.C., Nexstar Broadcasting Group, L.L.C. and certain of its Subsidiaries from time to
        time parties thereto, the several financial institutions from time to time parties thereto, Bank of
        America, N.A., Barclays Bank PLC and First Union National Bank. (Incorporated by reference to
        Exhibit 10.4 to Registration Statement on Form S-4 (File No. 333-68964) filed by Nexstar Finance
        Holdings, L.L.C. and Nexstar Finance Holdings, Inc.)

 10.6   First Amendment to Credit Agreement and Limited Consent, among Nexstar Finance, L.L.C.,
        Nexstar Broadcasting Group, L.L.C., the Parent Guarantors named therein, the several Banks named
        therein and Bank of America, N.A., dated as of May 17, 2001. (Incorporated by reference to Exhibit
        10.5 to Registration Statement on Form S-4 (File No. 333-68964) filed by Nexstar Finance
        Holdings, L.L.C. and Nexstar Finance Holdings, Inc.)

 10.7   Credit Agreement, by and among Nexstar Finance, L.L.C., the parent guarantors party thereto, Banc
        of America, N.A., CIBC Inc., Firstar Bank, N.A., Barclays Bank PLC and First Union National
        Bank, dated as of January 12, 2001. (Incorporated by reference to Exhibit 10.2 to Registration
        Statement on Form S-4 (File No. 333-62916) filed by Nexstar Finance, L.L.C. and Nexstar Finance,
        Inc.)

 10.8   Third Amendment to Credit Agreement, Limited Consent and Assumption Agreement Consent,
        dated as of November 14, 2001, among Bastet Broadcasting, Inc., Mission Broadcasting of Wichita
        Falls, Inc. and Mission Broadcasting of Joplin, Inc., Bank of America, N.A. and the other parties
        signatories thereto.

 10.9   Credit Agreement, by and among Bastet Broadcasting, Inc., Mission Broadcasting of Wichita Falls,
        Inc., Bank of America, N.A., Barclays Bank PLC and First Union National Bank, dated as of
        January 12, 2001. (Incorporated by reference to Exhibit 10.3 to Registration Statement on Form S-4
        (File No. 333-62916) filed by Nexstar Finance, L.L.C. and Nexstar Finance, Inc.)

 10.10  Guaranty Agreement, dated as of January 12, 2001, executed by Nexstar Broadcasting Group, L.L.C.
        and Nexstar Finance Holdings, L.L.C. in favor of the guaranteed parties defined therein.
        (Incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-4 (File No. 333-
        62916) filed by Nexstar Finance, L.L.C. and Nexstar Finance, Inc.)

 10.11  Guaranty Agreement, dated as of January 12, 2001, executed by Nexstar Finance Holdings, Inc. in
        favor of the guaranteed parties defined therein. (Incorporated by reference to Exhibit 10.6 to the
        Registration Statement on Form S-4 (File No. 333-62916) filed by Nexstar Finance, L.L.C. and
        Nexstar Finance, Inc.)

 10.12  Guaranty Agreement, dated as of January 12, 2001, executed by Bastet Broadcasting, Inc. and
        Mission Broadcasting of Wichita Falls, Inc. (Incorporated by reference to Exhibit 10.8 to the
        Registration Statement on Form S-4 (File No. 333-62916) filed by Nexstar Finance, L.L.C. and
        Nexstar Finance, Inc.)

 10.13  Security Agreement, dated as of January 12, 2001, made by each of the Nexstar entities defined
        therein in favor of Bank of America, N.A., as collateral agent. (Incorporated by reference to Exhibit
        10.9 to the Registration Statement on Form S-4 (File No. 333-62916) filed by Nexstar Finance,
        L.L.C. and Nexstar Finance, Inc.)

 10.14  Pledge and Security Agreement, dated as of January 12, 2001, made by each of the Nexstar entities
        defined therein in favor of Bank of America, N.A., as collateral agent. (Incorporated by reference to
        Exhibit 10.10 to the Registration Statement on Form S-4 (File No. 333-62916) filed by Nexstar
        Finance, L.L.C. and Nexstar Finance, Inc.)
</TABLE>

                                      E-2

<PAGE>

<TABLE>
<CAPTION>
Exhibit
  No.                                              Exhibit Index
-------                                            -------------
<C>     <S>

 10.15  Executive Employment Agreement, dated as of January 5, 1998, by and between Perry A. Sook and
        Nexstar Broadcasting Group, Inc., as amended on January 5, 1999. (Incorporated by reference to
        Exhibit 10.11 to the Registration Statement on Form S-4 (File No. 333-62916) filed by Nexstar
        Finance, L.L.C. and Nexstar Finance, Inc.)

 10.16  Amendment to Employment Agreement, dated as of May 10, 2001, by and between Perry A. Sook
        and Nexstar Broadcasting Group, Inc. (Incorporated by reference to Exhibit 10.12 to the Registration
        Statement on Form S-4 (File No. 333-62916) filed by Nexstar Finance, L.L.C. and Nexstar Finance,
        Inc.)

 10.17  Executive Employment Agreement, dated as of January 5, 1998, by and between Duane Lammers
        and Nexstar Broadcasting Group, Inc., as amended on December 31, 1999. (Incorporated by
        reference to Exhibit 10.13 to the Registration Statement on Form S-4 (File No. 333-62916) filed by
        Nexstar Finance, L.L.C. and Nexstar Finance, Inc.)

 10.18  Addendum to Employment Agreement, dated February 9, 2001, by and between Duane Lammers
        and Nexstar Broadcasting Group, Inc. (Incorporated by reference to Exhibit 10.14 to the Registration
        Statement on Form S-4 (File No. 333-62916) filed by Nexstar Finance, L.L.C. and Nexstar Finance,
        Inc.)

 10.19  Executive Employment Agreement, dated as of January 5, 1998, by and between Shirley Green and
        Nexstar Broadcasting Group, Inc., as amended on December 31, 1999. (Incorporated by reference to
        Exhibit 10.16 to the Registration Statement on Form S-4 (File No. 333-62916) filed by Nexstar
        Finance, L.L.C. and Nexstar Finance, Inc.)

 10.20  Second Addendum to Employment Agreement, dated as of February 6, 2002, by and between
        Shirley Green and Nexstar Broadcasting Group, Inc.

 10.21  Executive Employment Agreement, dated as of December 31, 1999, by and between Susana G.
        Willingham and Nexstar Broadcasting Group, Inc. (Incorporated by reference to Exhibit 10.18 to the
        Registration Statement on Form S-4 (File No. 333-62916) filed by Nexstar Finance Holdings, L.L.C.
        and Nexstar Finance, Inc.)

 10.22  Executive Employment Agreement, dated as of December 31, 1999, by and between Richard Stolpe
        and Nexstar Broadcasting Group, Inc. (Incorporated by reference to Exhibit 10.19 to the Registration
        Statement on Form S-4 (File No. 333-62916) filed by Nexstar Finance, L.L.C. and Nexstar Finance,
        Inc.)

 10.23  Assignment and Assumption Agreement, dated as of August 6, 2001, by Nexstar Finance Holdings
        II, L.L.C. and Nexstar Finance Holdings, L.L.C. (Incorporated by reference to Exhibit 10.20 to
        Registration Statement on Form S-4 (File No. 333-68964) filed by Nexstar Finance, L.L.C. and
        Nexstar Finance Holdings, Inc.)

 10.24  Purchase and Sale Agreement, dated as of December 31, 2001, by and among Mission Broadcasting
        of Joplin, Inc., GOCOM Broadcasting of Joplin, LLC and GOCOM of Joplin License Sub, LLC.

 10.25  Time Brokerage Agreement, dated as of December 31, 2001, by and between GOCOM of Joplin
        License Sub, LLC and Mission Broadcasting of Joplin, Inc.

 10.26  Outsourcing Agreement, dated as of November 28, 2001, by and among WYZZ, Inc., WYZZ
        License, Inc., and Nexstar Broadcasting of Peoria, L.L.C.

 21.1   Subsidiaries of the registrant. (Incorporated by reference to Exhibit 21.1 to Registration Statement
        on Form S-4 (File No. 333-68964) filed by Nexstar Finance Holdings, L.L.C. and Nexstar Finance
        Holdings, Inc.)
</TABLE>

                                      E-3