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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 10-Q

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Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934

|For the quarterly period ended
September 30, 2007 |  | Commission file number:
0-25042
|------------------------------------------------- |  | -------------------------------

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

|Delaware(State or other jurisdiction of
incorporation or organization) |  | 13-3339681(I.R.S. employer
identification no.)
|---------------------------------------------------------------------- |  | ----------------------------------------------

599 Lexington Avenue
New York, New York 10022(Address of principal executive offices)

Registrant's
telephone number, including area code:(212) 754-7070

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definitions of
"accelerated file and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large
accelerated filer o        Accelerated
filer ý        Non-accelerated filer o

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

Number of shares of Common Stock outstanding as of October 23, 2007: 20,960,255 shares of Class A Common Stock, and 1,941,414 shares of
Class B Common Stock.



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YOUNG BROADCASTING INC.
FORM 10-Q
Table of Contents

Part I        Financial Information



|        |                   |                                                                                                      
|------- | ----------------- | -----------------------------------------------------------------------------------------------------
|        | Item 1.           | Financial Statements (unaudited)                                                                     
|        |                   | Consolidated Balance Sheets as of December 31, 2006 and September 30, 2007.                          
|        |                   | Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2006 and 2007
|        |                   | Consolidated Statements of Stockholders' Equity for the Nine Months Ended September 30, 2007         
|        |                   | Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2006 and 2007          
|        |                   | Notes to Consolidated Financial Statements                                                           
|        | Item 2.           | Management's Discussion and Analysis of Financial Condition and Results of Operations                
|        | Item 3.           | Quantitative and Qualitative Disclosures About Market Risk                                           
|        | Item 4.           | Controls and Procedures                                                                              
|Part II | Other Information
|        | Item 1.           | Legal Proceedings                                                                                    
|        | Item 1A.          | Risk Factors                                                                                         
|        | Item 5.           | Other Information                                                                                    
|        | Item 6.           | Exhibits                                                                                             
|        | Signatures       

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Part I Financial Information

Item 1.Financial Statements

Young Broadcasting Inc. and Subsidiaries    Consolidated Balance Sheets

December 31,
2006

September 30,
2007(Unaudited)AssetsCurrent assets:Cash and cash equivalents

$
66,545,612

$
24,391,851Short term investments


40,793,628


33,610,874Trade accounts receivable, less allowance for doubtful accounts of $1,206,000 in 2006 and $985,000 in 2007


39,660,950


36,613,474Current portion of program license rights


19,688,256


23,719,690Prepaid expenses


2,888,298


3,054,231Total current assets


169,576,744


121,390,120Property and equipment, less accumulated depreciation and amortization of $191,516,000 in 2006 and $199,185,000 in 2007


67,591,170


63,934,442Program license rights, excluding current portion


2,781,183


1,624,298Deposits and other assets


4,106,555


3,679,374Investments in unconsolidated subsidiaries


3,369,077


3,434,237Unamortizable intangible assets


475,928,822


475,928,822Amortizable intangible assets, less accumulated amortization


61,250,371


58,204,334Deferred charges, less accumulated amortization of $4,945,000 in 2006 and $6,220,000 in 2007


10,097,789


8,827,256Total Assets

$
794,701,711

$
737,022,883Liabilities and stockholders' deficitCurrent liabilities:Trade accounts payable

$
8,639,954

$
8,268,273Accrued interest


21,066,771


9,332,366Accrued salaries and wages


5,961,662


4,536,537Accrued expenses


7,666,161


8,363,123Current installments of program license liability


19,290,164


25,844,814Current installment of long term debt


3,500,000


3,500,000Total current liabilities


66,124,712


59,845,113Program license liability, excluding current installments


6,032,066


3,602,288Long-term debt, excluding current installments


828,337,529


825,278,090Deferred tax liability and other long-term tax liabilities


38,311,413


56,776,688Other liabilities


8,085,896


8,367,284Total liabilities


946,891,616


953,869,463Stockholders' deficit:Class A Common Stock, $.001 par value. Authorized 40,000,000 shares; issued and outstanding 20,027,108 shares at 2006 and 20,761,386 shares at 2007


20,027


20,761Class B Common Stock, $.001 par value. Authorized 20,000,000 shares; issued and outstanding 1,941,414 shares at 2006 and 2007


1,941


1,941Additional paid-in capital


389,092,306


393,359,926Accumulated other comprehensive loss


(1,629,947
)

(2,134,496
)Accumulated deficit


(539,674,232
)

(608,094,712
)Total stockholders' deficit


(152,189,905
)

(216,846,580
)Total liabilities and stockholders' deficit

$
794,701,711

$
737,022,883


See accompanying notes to consolidated financial statements

2

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Young Broadcasting Inc. and Subsidiaries    Consolidated Statements of Operations    (Unaudited)

|                                                                                              |                           | Three Months Ended
September 30, |             | Nine Months Ended
September 30, |  
|--------------------------------------------------------------------------------------------- | ------------------------- | -------------------------------- | ----------- | ------------------------------- | -
|
|Net operating revenue                                                                         |                           | $                                | 53,550,762  |                                 | $
|                                                                                              |                           |                                  |             |                                 |  
|Operating expenses, excluding depreciation expense                                            |                           |                                  | 18,288,474  |                                 |  
|Amortization of program license rights                                                        |                           |                                  | 7,010,686   |                                 |  
|Write-down of program license rights                                                          |                           |                                  | 4,343,569   |                                 |  
|Selling, general and administrative expenses, excluding depreciation and amortization expense |                           |                                  | 17,303,037  |                                 |  
|Depreciation and amortization                                                                 |                           |                                  | 4,457,634   |                                 |  
|Corporate overhead, excluding depreciation expense                                            |                           |                                  | 3,316,715   |                                 |  
|                                                                                              |                           |                                  |             |                                 |  
|Operating (loss) income                                                                       |                           |                                  | (1,169,353  | )                               |  
|                                                                                              |                           |                                  |             |                                 |  
|Interest expense, net                                                                         |                           |                                  | (17,103,650 | )                               |  
|Other income (expense), net                                                                   |                           |                                  | 63,571      |                                 |  
|                                                                                              |                           |                                  |             |                                 |  
|                                                                                              |                           |                                  | (17,040,079 | )                               |  
|                                                                                              |                           |                                  |             |                                 |  
|Loss before provision for income tax                                                          |                           |                                  | (18,209,432 | )                               |  
|Income tax benefit (expense)                                                                  |                           |                                  | 2,468,449   |                                 |  
|                                                                                              |                           |                                  |             |                                 |  
|Net loss                                                                                      |                           | $                                | (15,740,983 | )                               | $
|                                                                                              |                           |                                  |             |                                 |  
|                                                                                              | Net loss per common share |                                  | $           | (0.72                           | )
|                                                                                              |                           |                                  |             |                                 |  
|Weighted average sharesBasic and dilutive                                                    |                           |                                  | 21,758,368  |                                 |  
|                                                                                              |                           |                                  |             |                                 |  

See accompanying notes to consolidated financial statements.

3

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Young Broadcasting Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
(Unaudited)

|                              |                                                                 | Common Stock |        |      |   |        |  |   |             |           |   |              |            
|----------------------------- | --------------------------------------------------------------- | ------------ | ------ | ---- | - | ------ |  | - | ----------- | --------- | - | ------------ | -----------
|
|
|Balance at December 31, 2006  |                                                                 | $            | 20,027 |      | $ | 1,941  |  | $ | 389,092,306 |           | $ | (539,674,232 | )          
|                              | Contribution of shares into Company's defined contribution plan |              |        | 454  |   |        |  |   |             | 1,510,904 |   |              |            
|                              | Grants under restricted stock plan                              |              |        | 495  |   |        |  |   |             | (495      | ) |              |            
|                              | Cancellation under restricted stock plan                        |              |        | (215 | ) |        |  |   |             | (576,027  | ) |              |            
|                              | Restricted stock plan compensation                              |              |        |      |   |        |  |   |             | 3,333,238 |   |              |            
|                              | FIN 48 Adoption                                                 |              |        |      |   |        |  |   |             |           |   |              | (46,211    
|                              | Net loss for the nine months ended September 30, 2007           |              |        |      |   |        |  |   |             |           |   |              | (68,374,269
|                              | Unrealized loss on derivative instrument                        |              |        |      |   |        |  |   |             |           |   |              |            
|                              |                                                                 |              |        |      |   |        |  |   |             |           |   |              |            
|                              |                                                                 |              |        |      |   |        |  |   |             |           |   |              |            
|                              |                                                                 |              |        |      |   |        |  |   |             |           |   |              |            
|Balance at September 30, 2007 |                                                                 | $            | 20,761 |      | $ | $1,941 |  | $ | 393,359,926 |           | $ | (608,094,712 | )          
|                              |                                                                 |              |        |      |   |        |  |   |             |           |   |              |            

See accompanying notes to consolidated financial statements

4

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Young Broadcasting Inc. and Subsidiaries    Consolidated Statements of Cash Flows    (Unaudited)

|                                                                            |                                                               | Nine Months Ended September 30, |            
|--------------------------------------------------------------------------- | ------------------------------------------------------------- | ------------------------------- | -----------
|
|Operating activities                                                        |                                                               |                                 |            
|Net loss                                                                    |                                                               | $                               | (57,364,620
|Adjustments to reconcile net loss to net cash used in operating activities: |                                                               |                                 |            
|                                                                            | Depreciation and amortization of property and equipment       |                                 |            
|                                                                            | Provision for uncollectible accounts                          |                                 |            
|                                                                            | Amortization of program license rights, including write-off   |                                 |            
|                                                                            | Amortization of intangibles and deferred charges              |                                 |            
|                                                                            | Non-cash compensation                                         |                                 |            
|                                                                            | Provision for income taxes                                    |                                 |            
|                                                                            | Loss (income) on unconsolidated subsidiaries, net of dividend |                                 |            
|                                                                            | Loss on sale of fixed assets                                  |                                 |            
|                                                                            | Unrealized appreciation on investments                        |                                 |            
|                                                                            | Payments on programming license liabilities                   |                                 |            
|Changes in assets and liabilities                                           |                                                               |                                 |            
|                                                                            | Decrease in trade accounts receivable                         |                                 |            
|                                                                            | Decrease (increase) in prepaid expenses                       |                                 |            
|                                                                            | Increase (decrease) in trade accounts payable                 |                                 |            
|                                                                            | Decrease in accrued expenses and other liabilities            |                                 |            
|                                                                            | Increase in other assets                                      |                                 |            
|                                                                            |                                                               |                                 |            
|Net cash used in operating activities                                       |                                                               |                                 | (24,988,472
|                                                                            |                                                               |                                 |            
|Investing activities                                                        |                                                               |                                 |            
|Capital expenditures                                                        |                                                               |                                 | (4,209,902 
|Purchases of short-term investments                                         |                                                               |                                 |           
|Maturities of short-term investments                                        |                                                               |                                 |           
|Proceeds from the disposal of fixed assets                                  |                                                               |                                 | 673,520    
|Realized appreciation of investments                                        |                                                               |                                 | (31,490    
|                                                                            |                                                               |                                 |            
|Net cash (used in) provided by investing activities                         |                                                               |                                 | (3,567,872 
|                                                                            |                                                               |                                 |            
|Financing activities                                                        |                                                               |                                 |            
|Principal borrowings on long-term debt                                      |                                                               |                                 | 50,000,000 
|Principal payment on Credit Facility                                        |                                                               |                                 | (2,500,000 
|Deferred debt financing costs incurred                                      |                                                               |                                 | (1,296,155 
|Principal payments under capital lease obligations                          |                                                               |                                 | (35,007    
|                                                                            |                                                               |                                 |            
|Net cash provided by financing activities                                   |                                                               |                                 | 46,168,838 
|                                                                            |                                                               |                                 |            
|Net increase (decrease) in cash                                             |                                                               |                                 | 17,612,494 
|Cash and cash equivalents at beginning of year                              |                                                               |                                 | 78,099,123 
|                                                                            |                                                               |                                 |            
|Cash and cash equivalents at September 30                                   |                                                               | $                               | 95,711,617 
|                                                                            |                                                               |                                 |            
|Supplemental disclosure of cash flow information                            |                                                               |                                 |            
|Interest paid                                                               |                                                               | $                               | 62,313,023 
|                                                                            |                                                               |                                 |            

See accompanying notes to consolidated financial statements.

5

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Young Broadcasting Inc. and Subsidiaries        Notes to Consolidated Financial Statements        (Unaudited)

1. Basis of Presentation

The business operations of Young Broadcasting Inc. and subsidiaries (the "Company") consist of ten network affiliated stations (five with ABC, three with
CBS, one with NBC and one with MyNetworkTV). KRON-TV had been independent until March 16, 2006, when it entered into an affiliation agreement with MyNetworkTV. On March 28,
2006, KELO-TV, KDLO-TV and KPLO-TV, our digital stations, also entered into an affiliation agreement with MyNetwork TV. The MyNetwork TV affiliation agreements are
for a term of five years commencing with the 2006-2007 broadcast season. MyNetworkTV started operations on September 5, 2006. The markets served by our stations are located in
Lansing, Michigan, Green Bay, Wisconsin, Lafayette, Louisiana, Nashville and Knoxville, Tennessee, Albany, New York, Richmond, Virginia, Davenport, Iowa, Sioux Falls, South Dakota and San Francisco,
California. In addition, the accompanying condensed consolidated financial statements include the Company's wholly owned national television sales representation firm. Significant intercompany
transactions and accounts have been eliminated.

The
accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial statements and with
the instructions to Form 10-Q and Article 10 of Regulation S-X. The interim financial statements are unaudited but include all adjustments, which are of a
normal recurring nature, that the Company considers necessary for a fair presentation of the consolidated financial position and the consolidated results of operations and cash flows for such period.

For
investments in which the Company owns 20% to 50% of voting shares and has significant influence over operating and financial policies, the equity method of accounting is used. Four
of the Company's stations are party to equity investments in third parties for tower agreements which are accounted for under the equity method. Accordingly, the Company's share of earnings and losses
of these companies are included in other income (expense), net, in the accompanying consolidated statements of operations of the Company. The Company recorded its share of losses of approximately
$1.0 million and its share of earnings of approximately $154,000 for the nine months ended September 30, 2006 and 2007, respectively, and its share of earnings of approximately $73,000
and approximately $53,000 for the three months ended September 30, 2006 and 2007, respectively.

Certain
prior year balances have been reclassified to conform to the presentation adopted in the current fiscal year. Previously, certain state taxes were reflected in other income
(expense), net in the income statement. Effective for the first quarter of 2007, the Company began recording these taxes as part of the income tax expense in the income statement, leading to a
reclassification from other income (expense), net to income tax expense of approximately $1.9 million for the nine months ended September 30, 2006.

Operating
results of interim periods are not necessarily indicative of results for a full year. For further information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2006.

In
February 2007, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
(SFAS 159). SFAS 159 is effective for fiscal years beginning after November 15, 2007. SFAS 159 allows entities to choose, at specified election dates, to measure eligible
financial assets and liabilities at fair value that are not otherwise required to be measured at fair value. If a company elects the fair value option for an

6

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eligible
item, changes in that item's fair value in subsequent reporting periods must be recognized in current earnings. SFAS 159 also establishes presentation and disclosure requirements
designed to draw comparison between entities that elect different measurement attributes for similar assets and liabilities. The Company has not yet adopted SFAS 159 and is currently evaluating
the provisions of SFAS 159 to determine the potential impact, if any, the potential adoption will have on the Company's financial statements.

In
September 2006, the Financial Accounting Standards Board (FASB) released FASB Statement No. 157, Fair Value Measurements (SFAS 157). SFAS is effective for fiscal
years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. The
Company is currently assessing the potential impact, if any, the adoption of this pronouncement will have on the financial statements.

2. Stock-Based Compensation

On May 4, 2004, the shareholders of the Company approved the 2004 Equity Incentive Plan ("2004 Plan"). The 2004 Plan is a continuation of the 1995 Stock
Option Plan and supplants the 1995 Stock Option Plan, under which no further awards will be granted. The 2004 Plan is administered by the Compensation Committee of the Board of Directors.

In
June 2007, June 2006 and June 2005, the Company awarded 602,968, 636,700 and 438,500 deferred stock units, respectively, to executive officers of the Company
under the 2004 Plan, with aggregate market values at the date of grant of approximately $2.3 million, $2.3 million and $2.0 million, respectively. Deferred stock awards represent
the right to receive shares of Class B common stock at the end of specified deferral periods. The deferred stock awards vest ratably in three equal annual installments beginning one year from
the date of the grant and, as they vest, are charged to the income statement as non cash compensation expense included in the selling, general and administrative expenses. Upon vesting the recipients
will be credited with units equivalent to shares. During the deferral period, the participants have no voting or other rights associated with stock ownership unless and until the shares are actually
delivered at the end of the deferral period. The end of the deferral period for the deferred stock awards will occur after the termination of employment. Additionally, granted but unvested deferred
stock units are forfeited upon termination of employment, unless for reasons of death or disability.

On
November 29, 2005, the Company entered into an exchange agreement with each of its executive officers (collectively, the "Exchange Agreements"). Pursuant to the Exchange
Agreements, options to purchase an aggregate of 2,198,375 shares of common stock of the Company, representing all of the outstanding and unexercised stock options held by such executive officers, were
cancelled and, in exchange for such cancelled options (which had a fair market value of approximately $182,000), the executive officers were awarded an aggregate of 318,791 deferred stock units (which
had an aggregate value of approximately $602,000) under the 2004 Plan. The compensation expense associated with the fair market value of the deferred stock units ($602,000) is being recognized ratably
over the three year vesting period.

In
June 2007, June 2006 and June 2005, the Company awarded 495,500, 590,450 and 432,600 shares, respectively, of restricted stock to certain officers and other
eligible key employees under the

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2004
Plan, with market values at the date of grant of approximately $1.9 million, $2.1 million and $2.0 million, respectively. The restricted shares vest ratably in three equal
annual installments beginning one year from the date of the grant and, as they vest, are charged to the income statement as non cash compensation expense included in the selling, general and
administrative expenses. During the vesting period, the participants have voting rights and the right to receive all dividends paid with respect to such shares. Upon vesting, the restricted stock
recipients will receive shares of unrestricted Class A Common Stock. Additionally, granted but unvested shares are forfeited upon termination of employment, unless for reasons of death or
disability.

On
November 30, 2005, the Company commenced an offer to all eligible employees to exchange all of their outstanding stock options. Under the terms of this offer, participating
employees had the ability to exchange their outstanding options with an exercise price of less than $30.44 per share for new restricted shares that vest over a period of three years. The number of
restricted shares to be received was based upon certain exchange ratios. In order to participate in this offer, employees were required to tender all of their options, regardless of when granted or
the exercise price. Pursuant to the terms of the offer, tendered options with exercise prices of $30.44 or above were to be cancelled upon expiration of the offer, without the payment of any
consideration. Options to purchase an aggregate of 949,776 shares of common stock were eligible for participation in the offer. The offer expired on December 30, 2005, at which time the Company
accepted for exchange and cancelled options to purchase a total of 945,776 shares of Common Stock with a fair market value of approximately $181,000, and issued an aggregate of 158,992 restricted
shares of Class A common stock, under the 2004 Plan, for an aggregate value of approximately $401,000. The compensation expense associated with the fair market value of the restricted stock
issued ($401,000) is being recognized ratably over the three year vesting period.



Subsequent to the above-discussed Exchange Agreements and exchange offer, the Company had an aggregate of 900 outstanding stock options that were unvested which
were fully expensed during the first half of 2006, in the amount of approximately $5,000. The Company had 535,417 stock options outstanding at December 31, 2006 and September 30, 2007.



The fair value of nonvested restricted shares and deferred stock units is determined based on the closing trading price of the Company's Class A common
stock on the grant date. The Company recorded non-cash compensation expense in connection with the issuance of the restricted shares and deferred stock units of approximately
$1.0 million and $1.1 million, respectively, for the three months ended September 30, 2006 and 2007, and $2.4 million and $3.2 million, respectively, for the nine months
ended September 30, 2006 and 2007.

There
were 2,176,679 and 2,407,367 unvested restricted shares and deferred stock units as of December 31, 2006 and September 30, 2007, respectively, with a weighted average
share price of $4.13 and $3.70, respectively.

8

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The
Company estimates recording additional compensation expense relating to previously issued restricted shares and deferred stock units of approximately $1.1 million for the
remainder of 2007 and approximately $3.7 million, $2.0 million and $583,000 during 2008, 2009, and 2010, respectively.

During
the first quarter of 2006, the Company adopted FASB Statement No. 123 (R),Share-Based Payment("SFAS 123R"), which
requires companies to measure and recognize compensation expense for all stock-based payments at fair value. The Company adopted SFAS 123R using the modified prospective method, and
consequently has not retroactively adjusted results from prior periods.

The
Company does not currently recognize tax benefits resulting from tax deductions in excess of the compensation costs recognized because of the federal and state net operating loss
carryforwards available to offset future federal and state taxable income. Accordingly, the adoption of SFAS 123R did not have any impact on the Company's consolidated statements of cash flows.

Prior
to January 1, 2006, the Company had accounted for its share-based payments to employees under FASB Statement No. 123,Accounting for Stock
Based Compensation(SFAS "123"), which allowed companies to either expense the estimated fair value of stock options or to follow the intrinsic value method set forth in
Account Principles Board Opinion No. 25,Accounting for Stock Issued to Employees("APB 25"), but disclose the pro forma net income (loss) had
the fair value of the options been expensed.

3. Intangible Assets

Intangible assets, which include broadcasting licenses, network affiliation agreements, and other intangibles, are carried on the basis of cost, less accumulated
amortization. Cost is based upon appraisals performed at the time of acquisition. Broadcast licenses are considered to have an indefinite life. Network affiliation agreements are amortized over
25 years, and other definite lived intangible assets are amortized over 10 to 15 years.

The
following table sets forth the summarized disclosures related to intangible assets:

|                                    |  | As of December 31, 2006 |         | As of September 30, 2007
|----------------------------------- |  | ----------------------- | ------- | ------------------------
|
|
|Indefinite-lived intangible assets: |  |                         |         |                         
|Broadcast licenses                  |  | $                       | 475,929 |                         
|Definite-lived intangible assets:   |  |                         |         |                         
|Network Affiliations                |  | $                       | 91,164  |                         
|Other intangible assets             |  |                         | 13,401  |                         
|                                    |  |                         |         |                         
|                                    |  | $                       | 104,565 |                         
|                                    |  |                         |         |                         

Aggregate
amortization expense for the nine months ended September 30, 2006 and 2007 was $3.2 million and $3.0 million, respectively. Aggregate amortization expense
for the three months ended September 30, 2006 and 2007 was $1.1 million and $962,000, respectively.

9

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It
is the Company's policy to account for Network Affiliations and other definite-lived intangible assets at the lower of amortized cost or estimated fair value. As part of an ongoing
review of the valuation and amortization of other intangible assets of the Company and its subsidiaries, management assesses the carrying value of Network Affiliations and other definite-lived
intangible assets if facts and circumstances suggest that there may be impairment. If this review indicates that Network Affiliations and other definite-lived intangible assets will not be recoverable
as determined by a non-discounted cash flow analysis of the operating assets over the remaining amortization period, the carrying value of other intangible assets would be reduced to
estimated fair value.

In
June 2001, the FASB issued Statement of Financial Accounting Standards No. 142,Goodwill and Other Intangible Assets("SFAS 142"). FCC licenses are valued using a "Greenfield" income approach. Under this approach, the FCC license is valued by analyzing the estimated after-tax discounted future
cash flows of the station. The assumptions used in the discounted cash flow models reflect historical station performance, industry standards and trends in the respective markets. An analysis of the
financial multiples for publicly-traded broadcasting companies, as well as a comparable sales analysis of television station sales, was also utilized to confirm the results of the income approach. The
Company adopted this methodology to value broadcast licenses as the Company believes this methodology has, in recent years, become the methodology generally used within the broadcast industry to value
FCC licenses.

If
these estimates or related assumptions materially change in the future, the Company may be required to record impairment charges not previously recorded for these assets.

4. Long-Term Debt

On May 3, 2005, the Company entered into an amended and restated senior credit facility. The amended credit facility provides for a $300 million
term loan and a $20 million revolving credit facility. The credit facility bears a floating interest rate, based upon LIBOR, which ranged from 7.75% to 7.88% at September 30, 2007. On
May 3, 2005, the full amount of the term loan was borrowed. The proceeds of the term loan were used to finance the purchase by the Company of all of its $246.9 million outstanding
principal amount of 81/2% Senior Notes due 2008 and for working capital. The term loan will mature in 2012 and the revolving facility will mature in 2010. The Company capitalized
approximately $6.0 million of fees associated with the new term loan and revolving credit facility.

On
May 30, 2006, the Company entered into (i) the First Amendment (the "First Amendment") to the Senior Credit Facility and (ii) the Increase Joinder (the "Increase
Joinder") to the Senior Credit Facility. The First Amendment effected certain amendments to the Senior Credit Facility including, without limitation, (i) the reduction of the minimum amount of
cash the Company must maintain from $35.0 million to $10.0 million and (ii) an increase of 0.25% to each of the Base Rate Margin and the LIBOR Rate Margin (used in the calculation
of interest rates payable by the Company under the Senior Credit Facility). As a result of the margin increases, the Base Rate and the LIBOR Rate margins are now equal to 1.50% and 2.50%,
respectively. The Increase Joinder provided for a $50.0 million incremental term loan under the Senior Credit Facility. The full $50.0 million of the incremental term loan was borrowed
by the Company on May 30, 2006. The Company capitalized approximately $1.4 million of fees associated with the incremental term loan and First Amendment.

10

---



The
incremental term loan has the same terms and conditions as the term loans outstanding under the Senior Credit Facility (as amended by the First Amendment) immediately prior to the
incremental term loan borrowing. As of September 30, 2007, approximately $342.5 million was outstanding under the term loan portion of the Senior Credit Facility.

On
May 3, 2005, the Company entered into an interest rate swap agreement for a notional amount of $71.0 million with a commercial bank who is also a lender under the senior
credit facility. The swap expires on May 8, 2008. Upon effectiveness, the Company began to pay a fixed interest of 4.3425% and the Company receives interest from the commercial bank, based upon
a three month LIBOR rate. It is the Company's intention to ensure the interest rate reset dates of the swap and the term loan will
match over the term of the swap, and therefore the changes in the fair value of the interest-rate swap are expected to significantly offset changes in the cash flows of the floating rate
debt. The Company accounts for this agreement as a cash flow hedge under FASB Statement No. 133,Accounting for Derivative Instruments and Hedging
Activities,and as such, the change in the fair value of the interest rate swap is reported as a component of other comprehensive income (loss). For the three and nine months
ended September 30, 2007 a loss of approximately $323,000 and approximately $505,000, respectively, was recorded in other comprehensive income (loss). For the three and nine months ended
September 30, 2006 a loss of approximately $739,000 and a gain of approximately $228,000, respectively, were recorded in other comprehensive income (loss).

Long-term
debt at December 31, 2006 and September 30, 2007 consisted of the following:

December 31, 2006

September 30, 2007(in thousands)Senior Credit Facility

$
345,125

$
342,50083/4% Senior Subordinated Notes due 2014


140,000


140,00010% Senior Subordinated Notes due 2011


346,713
(1)

346,278
(1)Total Long Term Debt

$
831,838

$
828,778Less:Scheduled current maturities


(3,500
)

(3,500
)Long term debt excluding all current installments(2)

$
828,338

$
825,278


---



The
Company's Senior Subordinated Notes are general unsecured obligations of the Company and subordinated in right of payment to all senior debt, including all indebtedness of the
Company under the Senior Credit Facility. The Senior Subordinated Notes are guaranteed, fully and unconditionally, and are guaranteed jointly and severally, on a senior subordinated unsecured basis by
all of the Company's wholly owned subsidiaries. The Company has no independent assets or operations, other than the equity in its subsidiaries.

11

---



5. Income Taxes

The Company adopted the provisions of FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxesan interpretation of FASB
Statement No. 109" (FIN 48), on January 1, 2007. FIN 48 clarifies the accounting and reporting for uncertainties in income tax law.

As
a result of the implementation of FIN 48, the Company recognized a $46,211 increase in its liability for income taxes, which was accounted for as an increase to the January 1,
2007 accumulated deficit. As of the date of adoption and after recognizing the increase in liability noted above, the Company's unrecognized tax benefits totaled $3.1 million, all of which, if
recognized, would affect the effective tax rate in future periods.

Interest
and penalties related to income tax liabilities are included in income tax expense. The Company had approximately $139,000 accrued at January 1, 2007 for the payment of
interest and penalties, which is included in the unrecognized tax benefit of $3.1 million as discussed above.

While
the Company does not anticipate any significant changes to the amount of liabilities for unrecognized tax benefits within the next twelve months, there can be no assurance that the
outcomes from any tax examinations will not have a significant impact on the amount of such liabilities, which could have an impact on the operating results or financial position of the Company.

With
limited exceptions, the Company is no longer subject to U.S. federal and state and local income tax audits by taxing authorities for years through December 31, 2003.

At
December 31, 2006, the Company had net operating loss ("NOL") carryforwards for tax purposes of approximately $426.6 million expiring at various dates
through 2026, for which a full valuation allowance has been provided.

With
the adoption of the FASB issued Statement No.142, Goodwill and Other Intangible Assets (SFAS 142), the Company no longer amortizes the book basis in the indefinite-lived
intangibles, but continues to amortize these intangibles for tax purposes. Beginning with the first quarter of 2005, the Company started recording a deferred tax provision for the excess of book basis
over tax basis of intangible assets, to the extent that such excess is not expected to reverse during the net operating loss carryforward period. Income tax expense for the nine months ended September
30, 2006 and 2007 primarily consists of deferred income tax expense of $18.4 million and $17.3 million, respectively, related to the increase in the Company's deferred tax liability for
the tax effect of the difference between the book and tax basis of the intangible assets not expected to reverse during the net operating loss carryforward period.

The
Company will have deferred tax liabilities that will arise each quarter because the taxable temporary differences related to the amortization of these assets will not reverse prior
to the expiration period of the Company's deductible temporary differences unless the related assets are sold or an impairment of the assets is recorded. The Company expects that it will record a
total of approximately $3.9 million to increase deferred tax liabilities during the remaining three months of 2007.

6. Employee Benefit Plans

The Company's defined benefit pension plan covers the IBEW Local 45 of KRON-TV employees.

12

---



The
Company contributed approximately $843,000 to the benefit plan in 2007. Through September 30, 2007 approximately $739,000 was contributed. In October 2007 the final
payment of $104,000 was contributed.

Components
of the net periodic benefit (cost) were as follows:

|                                                                |  | Three Months Ended
September 30, |          | Nine Months Ended
September 30, |  
|--------------------------------------------------------------- |  | -------------------------------- | -------- | ------------------------------- | -
|
|Service cost                                                    |  | $                                | 10,550   |                                 | $
|Interest cost                                                   |  |                                  | 149,591  |                                 |  
|Expected return of plan assets                                  |  |                                  | (168,759 | )                               |  
|Amortization of the unrecognized obligation or transition asset |  |                                  | (3,459   | )                               |  
|Recognized loss                                                 |  |                                  | 34,638   |                                 |  
|                                                                |  |                                  |          |                                 |  
|Net periodic cost                                               |  | $                                | 22,561   |                                 | $
|                                                                |  |                                  |          |                                 |  

7. Commitments and Contingencies



Each of the Company's stations is affiliated with its network pursuant to an affiliation agreement. The following chart provides details concerning the
affiliation of our stations and the dates of expiration of the respective affiliation agreements

|Station                  |  | Network Affiliation |  | Expiration Date   
|------------------------ |  | ------------------- |  | ------------------
|WKRN-TV (Nashville, TN)  |  | ABC                 |  | December 31, 2009 
|WTEN-TV (Albany, NY)     |  | ABC                 |  | December 31, 2009 
|WRIC-TV (Richmond, VA)   |  | ABC                 |  | December 31, 2009 
|WATE-TV (Knoxville, TN)  |  | ABC                 |  | December 31, 2009 
|WBAY-TV (Green Bay, WI)  |  | ABC                 |  | December 31, 2009 
|KWQC (Quad Cities        |  | NBC                 |  | January 1, 2015   
|WLNS (Lansing, MI)       |  | CBS                 |  | September 15, 2012
|KELO (Sioux Falls, SD)   |  | CBS(1)              |  | April 2, 2015     
|KLFY (Lafayette, LA)     |  | CBS                 |  | September 30, 2012
|KRON (San Francisco, CA) |  | MyNetworkTV         |  | September 5, 2011 

---

The
Company recently renewed the ABC, CBS and NBC affiliations. Under the renewed agreements, the Company will be receiving significantly less network compensation than it received from
ABC, CBS and NBC under the expired agreements.

13

---



8. Earnings Per Share

The weighted average number of shares outstanding during the period has been used to calculate earnings per share. The outstanding stock options and deferred
stock units have not been included in the computation of earnings per share because they would be anti-dilutive.

For
the three and nine months ended September 30, 2007, common stock equivalents, consisting of 610,764 and 683,491 shares of common stock underlying outstanding deferred stock
units, have been excluded from the computation as they are anti-dilutive on the loss per share. For the three and nine months ended September 30, 2006, common stock equivalents,
consisting of 152,487 and
155,171 shares of common stock underlying outstanding deferred stock units, have been excluded in the computation as they are anti-dilutive on the loss per share. For all periods, all
shares underlying outstanding stock options are excluded for the computation of diluted earnings per share, since the exercise price of all previously granted stock options that remain outstanding was
greater than the average market price of the common shares.

14

---





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

FORWARD-LOOKING STATEMENTS

FORWARD LOOKING STATEMENTS ARE ALL STATEMENTS, OTHER THAN STATEMENTS OF HISTORICAL FACTS, INCLUDED IN THIS REPORT. THE FORWARD LOOKING
STATEMENTS CONTAINED IN THIS REPORT CONCERN, AMONG OTHER THINGS, CERTAIN STATEMENTS UNDER "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS." FORWARD LOOKING
STATEMENTS INVOLVE RISKS AND UNCERTAINTIES, AND ARE SUBJECT TO CHANGE BASED ON VARIOUS IMPORTANT FACTORS, INCLUDING THE IMPACT OF CHANGES IN NATIONAL AND REGIONAL ECONOMIES, PRICING FLUCTUATIONS IN
LOCAL AND NATIONAL ADVERTISING, VOLATILITY IN PROGRAMMING COSTS AND GEOPOLITICAL FACTORS.

Introduction

Management's discussion and analysis of financial condition and results of operation ("MD&A") is provided as a supplement to the accompanying consolidated
financial statements and footnotes to help provide an understanding of the Company's financial condition, changes in financial condition and results of operations. MD&A is organized as follows:

Overview of our BusinessThis section provides a general description of the Company's business, as
well as recent developments that have occurred during 2007 that the Company believes are important in understanding its results of operations and financial condition or to anticipate future trends.

Results of OperationsThis section provides an analysis of the Company's results of operations for the
three and nine months ended September 30, 2007 and 2006. This analysis is presented on a consolidated basis. In addition, this section provides a brief description of significant transactions
and events that impact the comparability of the results being analyzed.

Liquidity and Capital ResourcesThis section provides an analysis of the Company's cash flows for the
nine months ended September 30, 2007 and 2006. Included in the discussion of outstanding debt is a discussion of the amount of financial capacity available to fund the Company's future
commitments and obligations, as well as a discussion of other financing arrangements.

Overview of our Business

The operating revenue of the Company's stations is derived primarily from advertising revenue and, to a much lesser extent, from compensation paid by the networks
to its affiliated stations for broadcasting network programming.

Advertising
is sold for placement within and adjoining a station's network and locally originated programming. Advertising is sold in time increments and is priced primarily on the basis
of a program's popularity among the specific audience an advertiser desires to reach, as measured principally by periodic audience surveys. In addition, advertising rates are affected by 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
highest during the most desirable viewing hours, with corresponding reductions during other hours. The ratings of a local station affiliated with a national television network can be affected by
ratings of network programming.

Most
advertising contracts are short-term, and generally run only for a few weeks. Approximately 60% of the gross revenue of the Company's stations during the nine months
ended September 30, 2007 was generated from local advertising, which is sold by a station's sales staff directly to local accounts. The remainder of the gross revenue is primarily comprised of
revenues from national advertising, which

15

---



is
sold by the Company's wholly owned subsidiary, Adam Young Inc. ("AYI"), a national advertising sales representative. The stations generally pay commissions to advertising agencies on local,
regional and national advertising.

Expenditures
by advertisers tend to be cyclical, reflecting overall economic conditions, as well as budgeting and buying patterns. A decline in the economic prospects of advertisers or
the economy in
general could alter current or prospective advertisers' spending priorities. This could cause our revenues or operating results to decline significantly in any given period.

The
advertising revenue of the Company's stations are 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 election years due to spending by political
candidates, for which spending typically is heaviest during the fourth quarter.

The
stations' primary operating expenses are for employee compensation, news-gathering, production, programming and promotion costs. A high proportion of the operating
expenses of the stations are fixed.

Television Revenues

Set forth below are the principal types of television revenues received by the Company's stations, for the periods indicated, and the percentage contribution of
each to the Company's total revenue, as well as agency and national sales representative commissions:

|            |                  | Three Months Ended
September 30, |       | Nine Months Ended
September 30, |      
|----------- | ---------------- | -------------------------------- | ----- | ------------------------------- | -----
|
|
|
|Revenues    |                  |                                  |       |                                 |      
|            | Local            |                                  | $     | 32.5                            |      
|            | National         |                                  |       | 18.0                            |      
|            | Network          |                                  |       | .7                              |      
|            | Political        |                                  |       | 7.8                             |      
|            | Barter           |                                  |       | 1.3                             |      
|            | Production/Other |                                  |       | 1.9                             |      
|            |                  |                                  |       |                                 |      
|            |                  |                                  | Total |                                 |      
|Commissions |                  |                                  | (8.6  | )                               | (13.9
|            |                  |                                  |       |                                 |      
|Net Revenue |                  | $                                | 53.6  |                                 | 86.1 
|            |                  |                                  |       |                                 |      

16

---



Results of Operations

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

The following table sets forth the Company's operating results for the three months ended September 30, 2007 as compared to the three months ended
September 30, 2006.

|                                                                   |  | For the three months ended September 30, |           
|------------------------------------------------------------------ |  | ---------------------------------------- | ----------
|
|
|Net revenue                                                        |  | $                                        | 53,551    
|Operating expenses, including SG&A, excluding depreciation expense |  |                                          | 35,591    
|Amortization of program license rights                             |  |                                          | 7,011     
|Write-down of program license rights                               |  |                                          | 4,343     
|Depreciation and amortization                                      |  |                                          | 4,458     
|Corporate overhead, excluding depreciation expense                 |  |                                          | 3,317     
|                                                                   |  |                                          |           
|Operating income                                                   |  |                                          | (1,169    
|                                                                   |  |                                          |           
|Interest expense, net                                              |  |                                          | (17,104   
|Other income, net                                                  |  |                                          | 64        
|                                                                   |  |                                          |           
|                                                                   |  |                                          | (17,040   
|                                                                   |  |                                          |           
|Loss from continuing operations before provision for income taxes  |  |                                          | (18,209   
|Income tax benefit (expense)                                       |  |                                          | 2,468     
|                                                                   |  |                                          |           
|Net loss                                                           |  | $                                        | (15,741   
|                                                                   |  |                                          |           
|Basic net loss per common share                                    |  | $                                        | (0.72     
|                                                                   |  |                                          |           
|Basic shares used in earnings per share calculation                |  |                                          | 21,758,368

Net
Revenue includes: (i) cash and barter advertising revenues, net of agency commissions; (ii) network compensation; and (iii) other revenues, which includes
retransmission consent revenue, represent less approximately 3% of total net revenue. Net revenue for the three months ended September 30, 2007 was $47.5 million, as compared to
$53.6 million for the three months ended September 30, 2006, a decrease of $6.1 million or 11.4%. The major components of, and changes to, net revenue were as follows:



Operating
expenses, including selling, general and administrative expenses, for the three months ended September 30, 2007 were $33.8 million as compared to
$35.6 million for the three months ended

17

---



September 30,
2006, a decrease of $1.8 million or 5.0%. The major components of, and changes to, operating expenses were as follows:



Amortization
of program license rights for the three months ended September 30, 2007 was $5.6 million, compared to $7.0 million for the three months ended
September 30, 2006, a decrease of $1.4 million, or 20.3%. The decrease was due primarily to a programming write-down recorded during the third quarter of 2006, on a
programming contract which ends in 2009. This write-down accelerated the programming amortization expense in that period, thus reducing future amortization expense associated with this
program.

During
the third quarter of 2007, the Company recorded an impairment write-down at one of its stations of approximately $4.0 million for the 2007-2008
season of the "Dr Phil" show because it is anticipated that such show will generate a loss over the contract term. This compares to the write-down of approximately $4.3 million
noted in the preceding paragraph that was recorded for the three months ended September 30, 2006. The 2006 write-down, which was primarily a consequence of the shifting of certain
prime-time programming to late night as described below, reduced the future amortization expense associated with such programming. In September 2006, the Company's San Francisco
station, KRON-TV, became an affiliate of MyNetwork. This affiliation required the shifting of syndicated programming previously being shown during prime-time (10:00 P.M.
to 11:00 P.M.) to late night (11:30 P.M. to 12:30 A.M.). Spot rates for late night are lower than those charged for primetime spots. Accordingly, the Company determined that the
asset value of the programming that was shifted from primetime to late night, which programming has a contract end date of September 12, 2009, was above realizable value and that a
write-down of this programming asset was therefore required.

Depreciation
of property and equipment and amortization of intangible assets was $4.1 million for the three months ended September 30, 2007 as compared to
$4.5 million for the three months ended September 30, 2006, a decrease of approximately $391,000 or 8.8%. Depreciation of property and equipment decreased due to various furniture,
fixtures and computers becoming fully depreciated during the third quarter of 2006.

Corporate
Overhead for the three months ended September 30, 2007 was $2.8 million, compared to $3.3 million for the three months ended September 30, 2006, a
decrease of $556,000, or 16.8%. The major cause of the changes in corporate expenses was a decrease in personnel costs of approximately $712,000 resulting primarily from a decrease in bonus expense
resulting from the reduced operating results.

18

---



Interest expense, net for the three months ended September 30, 2007 was $17.4 million, compared to $17.1 million for the same period in 2006, an increase of
$320,000, or 1.9%. This increase is due primarily to a decrease in interest income of approximately $443,000 resulting from the combination of a lower cash balance and lower interest rates year over
year. This was slightly offset by a decrease in interest expense of approximately $123,000. This is due in part to lower interest rates on the Company's debt, with interest rates ranging from 7.88% to
8.0% at September 30, 2006 as compared to rates ranging from 7.75% to 7.88% at September 30, 2007. Additionally, the Company makes principal payments under its Senior Credit Facility of
approximately $875,000 on a quarterly basis, thereby reducing the outstanding debt by approximately $3.5 million year over year, thus reducing interest expense.

The
Company recorded an income tax provision of $4.8 million for the three months ended September 30, 2007 and a benefit of $2.4 million for the three months ended
September 30, 2006. Included in the tax provision/(benefit) was a deferred tax provision of $4.7 million and $4.2 million for the taxable temporary difference related to the
amortization of the Company's indefinite-lived intangible assets for the three months ended September 30, 2007 and 2006, respectively, which continues to be amortized for tax purposes.

As
a result of the above-discussed factors, the net loss for the Company was $24.8 million for the three months ended September 30, 2007, compared to a net loss of
$15.7 million for the three months ended September 30, 2006, a change of $9.1 million, or 57.7%.

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

The following table sets forth the Company's operating results for the nine months ended September 30, 2007 as compared to the nine months ended
September 30, 2006.

|                                                    |  | For the nine months ended September 30, |           
|--------------------------------------------------- |  | --------------------------------------- | ----------
|
|
|Net revenue                                         |  | $                                       | 158,692   
|Operating expenses, including SG&A                  |  |                                         | 103,440   
|Amortization of program license rights              |  |                                         | 20,683    
|Write off of program license rights                 |  |                                         | 4,544     
|Depreciation and amortization                       |  |                                         | 13,978    
|Corporate overhead, excluding depreciation expense  |  |                                         | 10,360    
|                                                    |  |                                         |           
|Operating income (loss)                             |  |                                         | 5,687     
|                                                    |  |                                         |           
|Interest expense, net                               |  |                                         | (49,443   
|Other expense, net                                  |  |                                         | (1,006    
|                                                    |  |                                         |           
|                                                    |  |                                         | (50,449   
|                                                    |  |                                         |           
|Loss from continuing operations before income taxes |  |                                         | (44,762   
|Income tax expense                                  |  |                                         | (12,603   
|                                                    |  |                                         |           
|Net loss                                            |  | $                                       | (57,365   
|                                                    |  |                                         |           
|Basic net loss per common share                     |  | $                                       | (2.69     
|                                                    |  |                                         |           
|Basic shares used in earnings per share calculation |  |                                         | 21,309,575

19

---



Net
revenue for the nine months ended September 30, 2007 was $146.3 million, as compared to $158.7 million for the nine months ended September 30, 2006, a
decrease of $12.4 million or 7.8%. The major components of, and changes to, net revenue were as follows:



Operating
expenses, including selling, general and administrative expenses, for the nine months ended September 30, 2007 were $101.4 million as compared to
$103.4 million for the nine months ended September 30, 2006, a decrease of $1.9 million, or 1.9%. The major components of, and changes to, operating expenses were as follows:



Amortization
of program license rights for the nine months ended September 30, 2007 was $17.7 million, compared to $20.7 million for the nine months ended
September 30, 2006, a decrease of approximately $3.0 million, or 14.3%. The decrease was due primarily to a programming write-down recorded during the nine months ended
September 30, 2006, on a programming contract which ends in 2009. This write-down accelerated the programming amortization expense in that period, thus reducing future amortization
expense associated with this program

During
the nine months ended September 30, 2007, the Company recorded an impairment write-down at one of its stations of approximately $4.0 million for the
2007-2008 season of the "Dr Phil" show because it is anticipated that such show will generate a loss over the contract term. This compares to the write-down of approximately
$4.5 million noted in the preceding paragraph that was recorded for the nine months ended September 30, 2006. The 2006 write-down, which was primarily a consequence of the
shifting of certain prime-time programming to late night as described below, reduced the future amortization expense associated with such programming. In September 2006, the
Company's San Francisco station, KRON-TV, became an affiliate of MyNetwork. This affiliation required the shifting of syndicated programming previously being shown during
prime-time (10:00 P.M. to 11:00 P.M.) to late night (11:30 P.M. to 12:30 A.M.). Spot rates for late night are lower than those

20

---



charged
for primetime spots. Accordingly, the Company determined that the asset value of the programming that was shifted from primetime to late night, which programming has a contract end date of
September 12, 2009, was above realizable value and that a write-down of this programming asset was therefore required.

Depreciation
of property and equipment and amortization of intangible assets was $12.6 million for the nine months ended September 30, 2007 as compared to
$14.0 million for the nine months ended September 30, 2006, a decrease of approximately $1.4 million, or 10.0%. Depreciation of property and equipment decreased due to various
furniture, fixtures and computers becoming fully depreciated during the nine months ended September 30, 2006.

Corporate
Overhead for the nine months ended September 30, 2007 was $9.5 million as compared to $10.4 million for the nine months ended September 30, 2006, a
decrease of approximately $829,000, or 8.0%. The major components and changes in corporate expenses were as follows:



Interest
expense for the nine months ended September 30, 2007 was $51.7 million, compared to $49.4 million for the same period in 2006, an increase of
$2.3 million, or 4.6%. In May 2006, the Company incurred an incremental term loan of $50.0 million under the Senior Credit Facility, leading to a higher debt balance in the first
six months of 2007 as compared to the corresponding period of 2006 and thus an increase in interest expense.

The
Company recorded an income tax provision of $17.4 million and $12.6 million for the nine months ended September 30, 2007 and 2006, respectively. This income tax
provision includes a deferred tax provision of $17.3 million and $18.4 million for the taxable temporary difference related to the amortization of the Company's indefinite-lived
intangible assets for the nine months ended September 30, 2007 and 2006, which continues to be amortized for tax purposes.

As
a result of the above-discussed factors, the net loss for the Company was $68.4 million for the nine months ended September 30, 2007, compared to a net loss of
$57.4 million for the nine months ended September 30, 2006, a change of $11.0 million, or 19.2%.

Liquidity and Capital Resources



The following tables present certain data that the Company believes is helpful in evaluating the Company's liquidity and capital resources (dollars in thousands).

Nine Months Ended September 30,2006

2007Net cash provided by (used in):Operating activities

$
(24,988
)
$
(42,781
)Investing activities


(3,568
)

3,278Financing activities


46,169


(2,651
)Net decrease increase in cash and cash equivalents

$
17,613

$
(42,154
)


21

---



December 31,
2006

September 30,
2007Cash and cash equivalents

$
66,546

$
24,392Short-term investments

$
40,794

$
33,610Long-term debt, including current portion

$
831,859

$
828,778Available under senior credit agreement

$
20,000

$
20,000


The
Company's cash flow is highly dependent upon the state of the advertising market and public acceptance of television programming. Any significant decline in the advertising market or
performance of the television programming broadcast by our stations could adversely impact the Company's cash flow from operations.

The
performance of KRON-TV has a significant impact on the Company's operating results. Consequently, the Company is particularly susceptible to economic conditions in the
San Francisco advertising market. The Company's operating results have been adversely affected by the disappointing performance of KRON's programming and the diminished San Francisco advertising
market.

The
Company has renewed its affiliations with ABC with respect to WKRN-TV, WTEN-TV, WRIC-TV, WATE-TV and WBAY-TV, with CBS
with respect to WLNS-TV, KLFY-TV and KELO-TV and its satellite stations (KCLO-TV, KDLO-TV and KPLO-TV) and with NBC with respect
to KWQC-TV. The renewed ABC affiliations expire on December 31, 2009, the renewed CBS affiliations for WLNS-TV and KLFY-TV expire on September 12,
2012, the renewed CBS affiliation for KELO-TV and its satellite stations expire on April 2, 2015 and the renewed NBC affiliation expires on January 1, 2015. Under the renewed
ABC, CBS and NBC affiliations, the Company will be receiving significantly less network compensation than it received from ABC, CBS and NBC under the prior agreements.

The
principal uses of cash that affect the Company's liquidity position include the following: the acquisition of and payments under programming rights for entertainment and sporting
events, capital and operational expenditures and interest payments on the Company's debt. The Company is required to make scheduled principal payments under the term loan portion of the senior credit
agreement, on a quarterly basis, equal to 0.25% of the initial aggregate amount of the term loan.

Sources and Uses of Cash



Net cash used in operating activities for the nine months ended September 30, 2007 and 2006 was $42.8 million and $25.0 million,
respectively. The reduction of cash from operating activities for the nine months ended September 30, 2007 was due primarily to the following items:



22

---





The
following items acted to offset these changes in operating expenses:





Cash provided by investing activities for the nine months ended September 30, 2007 was $3.3 million, compared to cash used in investing activities
for the nine months ended September 30, 2006 of $3.5 million. The following changes in investing activities were noted:



Cash used in financing activities for the nine months ended September 30, 2007 was approximately $2.7 million, as compared to cash provided by
financing activities of approximately $46.2 million for the nine months ended September 30, 2006. The following changes in financing activities were noted:



23

---







Debt Instruments, Guarantees and Related Covenants

On May 3, 2005, the Company amended and restated its senior credit facility (as amended, the "Senior Credit Facility"). The Senior Credit Facility consists
of (i) a term loan in the amount of $300.0 million that matures in 2012 and (ii) a revolving credit facility in the amount of $20.0 million that matures in 2010. On
May 3, 2005, the full $300.0 million of the term loan was borrowed. Approximately $278.0 million of the proceeds of the term loan borrowing were used to finance the purchase by
the Company of all of its $246.9 million outstanding principal amount of 81/2% Senior Notes due 2008. The balance of the term loan borrowing was used for working capital. The
Company pays an annual commitment fee at the rate of 0.5% per annum of the unused available borrowings under the revolving credit portion of the Senior Credit Facility. The Company capitalized
approximately $6.0 million of fees associated with the new term loan and revolving credit facility.

On
May 3, 2005, the Company entered into an interest rate swap agreement for a notional amount of $71.0 million with a financial institution who is also a lender under the
Senior Credit Facility. The swap expires on May 8, 2008. The Company began to pay a fixed interest of 4.3425% and the Company receives interest from the financial institution, based upon a
three month LIBOR rate. It is the Company's intention to ensure the interest rate reset dates of the swap and the term loan under the Senior Credit Facility will match over the term of the swap, and
therefore the changes in the fair value of the interest-rate swap are expected to significantly offset changes in the cash flows of the floating rate debt. The Company accounts for this
agreement as a cash flow hedge under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities and as such, the change in the fair value of the interest rate swap is
reported as a component of other comprehensive loss. For the quarter ended September 30, 2007, a loss of approximately $323,000 was recorded in other comprehensive income (loss).

On
May 30, 2006, the Company entered into (i) the First Amendment (the "First Amendment") to the Senior Credit Facility and (ii) the Increase Joinder (the "Increase
Joinder") to the Senior Credit Facility. The First Amendment effected certain amendments to the Senior Credit Facility including, without limitation, (i) the reduction of the minimum amount of
cash the Company must maintain from $35.0 million to $10.0 million and (ii) an increase of 0.25% to each of the Base Rate Margin and the LIBOR Rate Margin (used in the calculation
of interest rates payable by the Company under the Senior Credit Facility). As a result of the margin increases, the Base Rate and the LIBOR Rate margins are now equal to 1.50% and 2.50%,
respectively. The Increase Joinder provided for a $50.0 million incremental term loan under the Senior Credit Facility. The full $50.0 million of the incremental term loan was borrowed
by the Company on May 30, 2006. The proceeds of the incremental term loan borrowing were used for working capital and to pay fees and expenses related to the incremental term loan and the First
Amendment. The Company capitalized approximately $1.4 million of fees associated with the incremental term loan and First Amendment.

At
September 30, 2007, approximately $342.5 million was outstanding under the term loan and the full $20.0 million was available under the revolving facility. The
Senior Credit Facility provides, at the option of the Company, that borrowed funds bear interest based upon the "LIBOR Rate" or the "Base Rate" plus margins of 1.50% for Base Rate loans and 2.50% for
LIBOR Rate loans. At September 30, 2007, the Company was paying interest based on LIBOR, and the overall rate ranged from 7.75% to 7.88%. Each of the Company's subsidiaries has guaranteed the
Company's obligations under the Senior Credit Facility. The Senior Credit Facility is secured by the pledge of all the capital stock of the Company's subsidiaries and a first priority lien on all of
the assets of the Company and its subsidiaries. The Senior Credit Facility requires the Company to maintain a cash and short-term investment balance of at least $10.0 million. The
other covenants contained in the Senior Credit Facility are substantially similar to the covenants contained in the indentures governing the Company's senior subordinated notes. At
September 30, 2007, the Company was in compliance with all covenants contained in the credit facility.

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The
following is a summary of the Company's outstanding indebtedness (in thousands) and related annualized interest payments that are recorded during the period. Debt amounts outstanding
at December 31, 2006 and September 30, 2007 were as follows:

Annualized

|                                         |                                       | December 31,
2006 |         | September 30,
2007 |   | Interest
Payments(1)
|---------------------------------------- | ------------------------------------- | ----------------- | ------- | ------------------ | - | --------------------
|Senior Credit Facility                   |                                       | $                 | 345,125 |                    | $ | 342,500             
|83/4% Senior Subordinated Notes due 2014 |                                       |                   | 140,000 |                    |   | 140,000             
|10% Senior Subordinated Notes due 2011   |                                       |                   | 346,713 | (2)                |   | 346,278             
|                                         |                                       |                   |         |                    |   |                     
|                                         | Total Debt (excluding capital leases) |                   | $       | 831,838            |   | $                   
|                                         |                                       |                   |         |                    |   |                     

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The
Company's total debt at September 30, 2007 was approximately $828.8 million, consisting of approximately $342.5 million under the term loan portion of the Senior
Credit Facility, $484.3 million of Senior Subordinated Notes and $2.0 million of bond premiums. In addition, at September 30, 2007, the Company had an additional
$20.0 million of unused available borrowings under the revolving portion of the Senior Credit Facility.

It
is anticipated that the Company will be able to meet its working capital needs, scheduled principal and interest payments under the Company's Senior Credit Facility and Senior
Subordinated Notes and capital expenditures, from cash on hand, cash flow from operations and funds available under the Senior Credit Facility.

Income Taxes

The Company adopted the provisions of FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxesan interpretation of FASB
Statement No. 109" (FIN 48), on January 1, 2007. FIN 48 clarifies the accounting and reporting for uncertainties in income tax law.

As
a result of the implementation of FIN 48, the Company recognized a $46,211 increase in its liability for income taxes, which was accounted for as an increase to the January 1,
2007 accumulated deficit. As of the date of adoption and after recognizing the increase in liability noted above, the Company's unrecognized tax benefits totaled $3.1 million, all of which, if
recognized, would affect the effective tax rate in future periods.

Interest
and penalties related to income tax liabilities are included in income tax expense. The Company had approximately $139,000 accrued at January 1, 2007 for the payment of
interest and penalties, which is included in the unrecognized tax benefit of $3.1 million as discussed above.

While
the Company does not anticipate any significant changes to the amount of liabilities for unrecognized tax benefits within the next twelve months, there can be no assurance that the
outcomes from any tax examinations will not have a significant impact on the amount of such liabilities, which could have an impact on the operating results or financial position of the Company.

With
limited exceptions, the Company is no longer subject to U.S. federal and state and local income tax audits by taxing authorities for years through December 31, 2003.

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At
December 31, 2006, the Company had net operating loss ("NOL") carryforwards for tax purposes of approximately $426.6 million expiring at various dates
through 2026, for which a full valuation allowance has been provided.

With
the adoption of the FASB issued Statement No.142, Goodwill and Other Intangible Assets (SFAS 142), the Company no longer amortizes the book basis in the indefinite-lived
intangibles, but continues to amortize these intangibles for tax purposes. Beginning with the first quarter of 2005, the Company started recording a deferred tax provision for the excess of book basis
over tax basis of intangible assets, to the extent that such excess is not expected to reverse during the net operating loss carryforward period. Income tax expense for the nine months ended September
30, 2006 and 2007
primarily consists of deferred income tax provision of $18.4 million and $17.3 million, respectively, related to the increase in the Company's deferred tax liability for the tax effect
of the difference between the book and tax basis of the intangible assets not expected to reverse during the net operating loss carryforward period.

The
Company will have deferred tax liabilities that will arise each quarter because the taxable temporary differences related to the amortization of these assets will not reverse prior
to the expiration period of the Company's deductible temporary differences unless the related assets are sold or an impairment of the assets is recorded. The Company expects that it will record a
total of approximately $3.9 million to increase deferred tax liabilities during the remaining three months of 2007.

Contractual Obligations and Other Commercial Commitments

As of September 30, 2007, there were no significant changes to our outstanding contractual obligations and commercial commitments as disclosed in our Annual
Report on Form 10-K for the year ended December 31, 2006.

One
of the Company's stations has three future program contracts forDr. Philas of September 30, 2007, for a total cost of
approximately $27.7 million. Each of these three contracts is for a consecutive one-year term commencing in September 2008 and running through September 2011. Each of
these future program contracts are anticipated to generate a loss, requiring a write-down of the programming asset at the time that each asset is recorded on the Company's balance sheet
(generally in the third quarter). For the 2007-2008 season, commencing in September 2007, the Company recorded a programming impairment write-down of approximately
$4.0 million during the third quarter of 2007. Additionally, the Company anticipates programming impairment write-downs for each of the three remaining one-year contracts (for the
2008-2009, 2009-2010 and 2010-2011 seasons) of similar amounts, which write-downs will be recorded in September 2008, 2009 and 2010. The actual amounts of
such write-downs will be dependent on the future performance of the show.

Impact of Recently Issued Accounting Standards

In February 2007, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities (SFAS 159). SFAS 159 is effective for fiscal years beginning after November 15, 2007. SFAS 159 allows entities to choose, at specified election dates,
to measure eligible financial assets and liabilities at fair value that are not otherwise required to be measured at fair value. If a company elects the fair value option for an eligible item, changes
in that item's fair value in subsequent reporting periods must be recognized in current earnings. SFAS 159 also establishes presentation and disclosure requirements designed to draw comparison
between entities that elect different measurement attributes for similar assets and liabilities. The Company has not yet adopted SFAS 159 and is currently evaluating the provisions of
SFAS 159 to determine the potential impact, if any, the potential adoption will have on the Company's financial statements.

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In
September 2006, the Financial Accounting Standards Board (FASB) released FASB Statement No. 157, Fair Value Measurements (SFAS 157). SFAS is effective for fiscal
years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. The
Company is currently assessing the potential impact, if any, the adoption of this pronouncement will have on the financial statements.

Item 3.Quantitative and Qualitative Disclosure About Market Risk.

The
Company's Senior Credit Facility, with approximately $342.5 million outstanding as of September 30, 2007, bears interest at floating rates based on LIBOR. Accordingly,
the Company is exposed to potential losses related to changes in interest rates. The Company has entered into an interest rate derivative agreement to reduce the impact of changing interest rates on
its floating debt rate.

The
Company's Senior Subordinated Notes of approximately $484.3 million outstanding principal amount as of September 30, 2007 are general unsecured obligations of the
Company and are subordinated in right of payment to all senior debt, including all indebtedness of the Company under the Senior Credit Facility. The 83/4% Senior Subordinated Notes,
$140.0 million of which is outstanding, mature in 2014. The 10% Senior Subordinated Notes, $344.3 million of which is outstanding, mature in 2011. The annualized interest expense on the
outstanding Senior Subordinated Notes is approximately $46.7 million.

The
Company does not enter into derivatives or other financial instruments for trading or speculative purposes; however, in order to manage its exposure to interest rate risk, the
Company enters into derivative financial instruments. The Company has entered into two derivative financial instruments. In 2001, the Company entered into an interest rate swap for a notional amount
of $63.2 million, which expires in 2011. This swap was terminated during the year ended December 31, 2005. On May 3, 2005, the Company entered into an interest rate swap agreement
for a notional amount of $71.0 million with a commercial bank who is also a lender under the senior credit facility. The swap expires on May 8, 2008. Upon effectiveness, the Company
began to pay a fixed interest of 4.3425% and the Company receives interest from the commercial bank, based upon a three month LIBOR rate. It is the Company's intention to ensure the interest rate
reset dates of the swap and the term loan will match over the term of the swap, and therefore the changes in the fair value of the interest-rate swap are expected to significantly offset
changes in the cash flows of the floating rate debt. The Company accounts for this agreement as a cash flow hedge under FASB Statement No. 133,Accounting for Derivative
Instruments and Hedging Activities,and as such, the change in the fair value of the interest rate swap is reported as a component of other comprehensive income (loss). For the
three and nine months ended September 30, 2007 a loss of approximately $323,000 and approximately $505,000, respectively, was recorded in other comprehensive income (loss).

Item 4.Controls and Procedures.

Under the supervision and with participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of
our disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the
period covered by this quarterly report. Based on this evaluation our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of
September 30, 2007.

During
the quarter ended September 30, 2007, the Company continued the implementation of a new sales and traffic billing system as well as a new payroll system. While we expect that the
implementation of these new systems will enhance our existing controls over financial reporting, we do

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not
believe the new systems will materially affect, or be reasonably likely to materially affect, our controls over financial reporting.

There
has not been any change in our internal control over financial reporting (as defined in Rule 13(a)-15(f) under the Exchange Act) during the quarter ended
September 30, 2007 that has materially affected, or is reasonably likely to materially affect, our controls over financial reporting.

PART II. OTHER INFORMATION

Item 1.Legal Proceedings.

The Company is involved in legal proceedings and litigation arising in the ordinary course of business. In the Company's opinion, the outcome of such proceedings
and litigation currently pending will not materially affect the Company's financial condition or results of operations.

Item 1A.Risk Factors

There have been no material changes in the Company's risk factors from those disclosed in the Company's annual report on Form 10-K for the year
ended December 31, 2006.

Item 5.Other Information.

In accordance with the outside director compensation policy adopted by the Board of Directors in October 2003, each of the non-employee
directors of the Company is entitled to receive an annual retainer of $60,000, with half of such retainer being payable in cash and the other half being payable in deferred stock units. In addition,
under this compensation policy, the Chairman of the Audit Committee and the Chairman of the Compensation Committee are each entitled to receive an additional annual retainer of $10,000 and $5,000,
respectively, paid one half in cash and one half in deferred stock units.

Accordingly,
on October 1, 2007, for their service on the Company's Board of Directors during the twelve months beginning October 1, 2007, each of the six
non-employee directors of the Company (Alfred J. Hickey, David C. Lee, Alexander Mason, Leif Lomo, Richard Lowe and Reid Murray) was paid $30,000 in cash and was granted an award of 13,100
deferred stock units. Such number of deferred stock units was determined by dividing $30,000 by $2.29 (the closing selling price per share of the Company's Class A common stock on the Nasdaq
National Market on October 1, 2007). In addition, on October 1, 2007, Mr. Lomo (as Chairman of the Audit Committee) and Mr. Lee (as Chairman of the Compensation Committee)
were paid $5,000 and $2,500 in cash, respectively, and were granted awards of 2,184 and 1,092 deferred stock units, respectively.

The
deferred stock units represent the right to receive a like number of shares of the Company's common stock on the 180th day following the date the director ceases to serve as a board
member (or, if such 180th day is not a business day, the first business day immediately succeeding such 180th day), to the extent the units have vested as of such date. The deferred stock units will
vest in equal installments on the first and second anniversaries of the date of award. If a director voluntarily leaves the Board or is removed for cause, any unvested deferred stock units will be
forfeited. If a director ceases to be a Board member for any other reason, any unvested units will automatically vest in full.

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Item 6.Exhibits

|Exhibit
Number |  | Exhibit Description                            
|-------------- |  | -----------------------------------------------
|11             |  | Statement Re Computation of Per Share Earnings.
|31             |  | Rule 13a-14(a)/15d-14(a) Certifications        
|32             |  | Section 1350 Certifications                    

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SIGNATURES

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

|                       |  | YOUNG BROADCASTING INC.
|---------------------- |  | -----------------------
|Date: November 8, 2007 |  | By:                    
|Date: November 8, 2007 |  | By:                    

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