<PAGE>
 
--------------------------------------------------------------------------------


                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 10-Q


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

For the quarterly period ended March 31, 1998

                                       OR

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

For the transition period from ____________ to _____________


Commission File Number  0-19728

                        GRANITE BROADCASTING CORPORATION
             (exact name of registrant as specified in its charter)

                DELAWARE                                     13-3458782
(State or other jurisdiction of incorporation             (I.R.S. Employer
             or organization)                             Identification No.)

                                767 Third Avenue
                                   34th Floor
                            New York, New York 10017

                        Telephone number: (212) 826-2530

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

                     (APPLICABLE ONLY TO CORPORATE ISSUERS:)

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

     Class A Voting Common Stock, par value $.01 per share - 178,500 shares
outstanding at March 31, 1998; Common Stock (Nonvoting), par value $.01 per
share - 9,538,052 shares outstanding at March 31, 1998.
<PAGE>
 
                          PART I. FINANCIAL INFORMATION
                        GRANITE BROADCASTING CORPORATION
                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                                     March 31,       December 31,
                     ASSETS                                                            1998              1997
                                                                                   -------------    -------------
                                                                                    (Unaudited)
<S>                                                                                <C>              <C>          
Current assets:
    Cash and cash equivalents                                                      $   3,945,201    $   2,170,927
    Accounts receivable, net                                                          28,832,415       35,308,464
    Film contract rights                                                               8,154,601       10,097,262
    Other assets                                                                      13,587,055       10,958,742
                                                                                   -------------    -------------
                Total current assets                                                  54,519,272       58,535,395

Property and equipment, net                                                           35,507,667       36,004,876
Film contract rights and other noncurrent assets                                       6,316,633        7,041,000
Deferred financing fees, net                                                           9,832,635       10,213,314
Intangible assets, net                                                               518,266,104      521,819,428
                                                                                   -------------    -------------
                                                                                   $ 624,442,311    $ 633,614,013
                                                                                   =============    =============
                  LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
    Accounts payable                                                               $   3,319,818    $   3,885,239
    Accrued interest                                                                  10,444,670        4,387,546
    Other accrued liabilities                                                          7,164,147        5,682,202
    Film contract rights and other current liabilities                                11,094,476       13,779,691
                                                                                   -------------    -------------
Total current liabilities                                                             32,023,111       27,734,678

Long-term debt                                                                       385,790,035      392,779,025

Film contract rights payable                                                           5,964,237        6,905,486

Deferred tax and other noncurrent liabilities                                         30,499,692       31,751,733

Commitments
Redeemable preferred stock                                                           209,421,264      207,699,808

Stockholders' deficit:
    Common Stock: 41,000,000 shares authorized consisting of 1,000,000 shares of
       Voting Common Stock, $.01 par value, and 40,000,000 shares of Common
       Stock (Nonvoting), $.01 par value; 178,500 shares of Voting Common Stock
       and 9,538,052 shares of Common Stock (Nonvoting) (8,676,157
       shares at December 31,1997) issued and outstanding                                 97,165           88,546
    Additional paid-in capital                                                        22,668,842       24,529,712
    Accumulated deficit                                                              (58,358,896)     (54,411,868)
    Less: Unearned compensation                                                       (2,729,264)      (2,529,232)
             Treasury stock                                                              (47,000)         (47,000)
            Note receivable from officer                                                (886,875)        (886,875)
                                                                                   -------------    -------------
                  Total stockholders' deficit                                        (39,256,028)     (33,256,717)
                                                                                   -------------    -------------
                                                                                   $ 624,442,311    $ 633,614,013
                                                                                   =============    =============
</TABLE>


                             See accompanying notes.

                                       -1-
<PAGE>
 
                        GRANITE BROADCASTING CORPORATION
                      CONSOLIDATED STATEMENT OF OPERATIONS


<TABLE>
<CAPTION>
                                                       Three Months Ended March 31,
                                                       ----------------------------
                                                           1998            1997
                                                       ------------    ------------
                                                               (Unaudited)

<S>                                                    <C>             <C>         
Net revenue                                            $ 36,724,036    $ 32,297,811
Station operating expenses                               22,315,368      19,796,761
Time brokerage agreement fees                               150,000         150,000
Depreciation expense                                      1,364,619       1,375,476
Amortization expense                                      3,583,722       3,170,736
Corporate expense                                         2,017,063       1,473,754
Non-cash compensation expense                               332,520         192,336
                                                       ------------    ------------

    Operating income                                      6,960,744       6,138,748

Other expenses:
    Equity in net loss of investee                          486,720         400,000
    Interest expense, net                                 9,208,738       9,778,119
    Non-cash interest expense                               474,789         575,555
    Other                                                   241,525         191,696
                                                       ------------    ------------

Loss before income taxes and extraordinary item          (3,451,028)     (4,806,622)
Provision for income taxes                                  496,000         150,150
                                                       ------------    ------------

Loss before extraordinary item                           (3,947,028)     (4,956,772)
Extraordinary loss on early extinguishment of debt               --        (320,804)
                                                       ------------    ------------

Net loss                                               $ (3,947,028)   $ (5,277,576)
                                                       ============    ============

Net loss attributable to common stockholders           $(10,060,463)   $ (9,474,380)
                                                       ============    ============

Per common share:
    Basic and diluted loss before extraordinary item   $      (1.06)   $      (1.05)
    Basic and diluted extraordinary loss                         --           (0.04)
                                                       ------------    ------------
    Basic and diluted net loss                         $      (1.06)   $      (1.09)
                                                       ============    ============

Weighted average common shares outstanding                9,475,600       8,735,879
</TABLE>

                             See accompanying notes.

                                       -2-
<PAGE>
 
                        GRANITE BROADCASTING CORPORATION
                 STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
                          THREE MONTHS ENDED MARCH 31, 1998




<TABLE>
<CAPTION>                                                                                                                    
                                  Class A        Common       Additional                                                    
                                  Common         Stock         Paid-in      Accumulated       Unearned    Note Receivable   
                                   Stock       (Nonvoting)     Capital        Deficit       Compensation    from Officer    
                               ------------   ------------   ------------   ------------    ------------    ------------    
<S>                                  <C>           <C>        <C>           <C>              <C>               <C>          
Balance at December 31, 1997         $1,785        $86,761    $24,529,712   $(54,411,868)    $(2,529,232)      $(886,875)   
Dividends on redeemable
  preferred stock                                              (5,988,398)                                                  
Accretion of offering costs
  related to Cumulative
  Exchangeable Preferred Stock                                   (125,037)                                                  
Exercise of stock options                              416        141,865                                                   
Conversion of redeemable
  preferred stock into Common
  Stock (Nonvoting)                                  7,199      3,592,326                                                   
Issuance of Common Stock
  (Nonvoting)                                        1,004         (1,004)                                                  
Repurchase of redeemable
  preferred stock                                                                                                           
Grant of Stock Award Under
  Management Stock Plan                                           532,552                       (532,552)                   
Stock expense related to
  Management Stock Plan                                           (13,174)                       332,520                    
Net loss                                                                      (3,947,028)                                   
                               ------------   ------------   ------------   ------------    ------------    ------------    

Balance at March 31, 1998            $1,785        $95,380    $22,668,842   $(58,358,896)    $(2,729,264)       (886,875)   
                               ============   ============   ============   ============    ============    ============    

<CAPTION>                     
                                                    Total          
                                  Treasury      Stockholders'      
                                   Stock           Deficit         
                                ------------    ------------       
<S>                                 <C>         <C>                
Balance at December 31, 1997        $(47,000)   $(33,256,717)      
Dividends on redeemable                                            
  preferred stock                                 (5,988,398)      
Accretion of offering costs                                        
  related to Cumulative                                            
  Exchangeable Preferred Stock                      (125,037)      
Exercise of stock options                            142,281       
Conversion of redeemable                                           
  preferred stock into Common                                      
  Stock (Nonvoting)                                3,599,525       
Issuance of Common Stock                                           
  (Nonvoting)                                             --       
Repurchase of redeemable                                           
  preferred stock                                         --       
Grant of Stock Award Under                                         
  Management Stock Plan                                   --       
Stock expense related to                                           
  Management Stock Plan                              319,346       
Net loss                                          (3,947,028)      
                                ------------    ------------       
                                                                   
Balance at March 31, 1998           $(47,000)   $(39,256,028)      
                                ============    ============       
</TABLE>

                             See accompanying notes.

                                      -3-
<PAGE>
 
                        GRANITE BROADCASTING CORPORATION
                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                    Three Months Ended March 31,
                                                                                                    ----------------------------
                                                                                                       1998                 1997
                                                                                                 -------------        -------------
                                                                                                            (Unaudited)
<S>                                                                                              <C>                  <C>           
Cash flows from operating activities:
    Net loss                                                                                     $  (3,947,028)       $  (5,277,576)
    Adjustments to reconcile net loss to net cash
       provided by operating activities:
         Amortization of intangible assets                                                           3,583,722            3,170,736
         Depreciation                                                                                1,364,619            1,375,476
         Non-cash compensation expense                                                                 332,520              192,336
         Non-cash interest expense                                                                     474,789              575,555
         Extraordinary loss                                                                                 --              320,804
         Equity in net loss of investee                                                                486,720              400,000

Change in assets and liabilities net of effects from acquisitions of stations:
       Decrease (increase) in accounts receivable                                                    6,476,049             (658,886)
       Increase in accounts payable and accrued liabilities                                          6,973,648            4,497,915
       Decrease in film contract rights and other noncurrent assets                                  2,430,308            1,848,637
       (Decrease) increase in film contract rights payable and other liabilities                    (4,878,504)           3,311,182
       Increase in other assets                                                                     (2,867,316)          (1,058,641)
                                                                                                 -------------        -------------
         Net cash provided by operating activities                                                  10,429,527            8,697,538

Cash flows from investing activities:
       Payment for acquisitions of stations, net of cash acquired                                           --         (172,713,906)
       Investment in Datacast                                                                         (250,000)            (250,000)
       Capital expenditures                                                                           (647,725)            (657,289)
                                                                                                 -------------        -------------
         Net cash used in investing activities                                                        (897,725)        (173,621,195)

Cash flows from financing activities:
       Proceeds from bank financing                                                                         --           41,500,000
       Repayment of bank debt                                                                       (7,000,000)                  --
       Retirement of senior subordinated notes                                                              --          (19,405,000)
       Dividends paid                                                                                 (805,283)            (881,320)
       Other financing activities, net                                                                  47,755             (208,307)
       Proceeds from issuance of preferred stock                                                            --          144,742,500
                                                                                                 -------------        -------------
         Net cash (used in) provided by financing activities                                        (7,757,528)         165,747,873
                                                                                                 -------------        -------------

Net increase in cash and cash equivalents                                                            1,774,274              824,216
Cash and cash equivalents, beginning of period                                                       2,170,927              555,753
                                                                                                 -------------        -------------

    Cash and cash equivalents, end of period                                                     $   3,945,201        $   1,379,969

Supplemental information:
    Cash paid for interest                                                                       $   3,302,011        $   5,444,816
    Income taxes paid                                                                                   79,213              166,594
    Non-cash capital expenditures                                                                      219,685              208,307
    Non-cash dividends                                                                               5,195,943            3,240,625
</TABLE>

                             See accompanying notes.

                                       -4-
<PAGE>
 
                        GRANITE BROADCASTING CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 1 -  Basis of presentation

The accompanying unaudited consolidated financial statements include the
accounts of Granite Broadcasting Corporation and its subsidiaries (the
"Company"), have been prepared in accordance with the instructions to Form 10-Q
and do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. Operating
results for the three month period ended March 31, 1998 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1998. For further information, refer to the Company's consolidated financial
statements and notes thereto for the year ended December 31, 1997 which were
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1997. All significant intercompany accounts and transactions have been
eliminated. Data at and for the year ended December 31, 1997 are derived from
the Company's audited consolidated financial statements.

In the opinion of management, all adjustments of a normal recurring nature which
are necessary for a fair presentation of the results for the interim periods
have been made.

Note 2 - Acquisition and dispositions

On October 3, 1997, the Company entered into a definitive agreement with Pacific
FM Incorporated ("Pacific"), a California corporation, James J. Gabbert and
Michael P. Lincoln to acquire 51% of the outstanding stock of Pacific, the owner
of KOFY-TV, the WB affiliate serving the San Francisco-Oakland-San Jose,
California television market. It is a condition to the closing of the purchase
that the Company acquire the remaining 49% of the stock of Pacific. The total
purchase price for all the stock of Pacific will be $143,750,000 in cash,
subject to certain adjustments. In addition, the Company will pay $30,000,000
to the principal shareholders of Pacific for a covenant not to compete in the
San Francisco-Oakland-San Jose television market for a period of five years from
the closing of the acquisition. The proposed acquisition is subject to approval
by the Federal Communications Commission (the "FCC") and other customary closing
conditions and is expected to close in the third quarter of this year. Because
the Company already owns a television station with an overlapping service area,
KNTV, the Company has requested a permanent waiver of the FCC's local television
multiple ownership rule to permit it to own both KNTV and KOFY-TV.

On February 19, 1998, the Company entered into a definitive agreement with
Freedom Communications, Inc. ("Freedom") whereby Freedom will acquire the assets
of WWMT-TV, the CBS affiliate serving Grand Rapids-Kalamazoo-Battle Creek,
Michigan, and WLAJ-TV, the ABC affiliate serving Lansing, Michigan, for
$170,000,000 in cash, payable in cash at the closing of the transaction. The
Company currently operates WLAJ-TV pursuant to a time brokerage agreement. It is
anticipated that proceeds from the sale of WWMT-TV and WLAJ-TV, after payment of
the purchase price for WLAJ-TV, will be used to fund part of the purchase price
of KOFY-TV.

The consummation of the sale of WWMT-TV and WLAJ-TV is expected to occur in the
second quarter of this year and is contingent on, approval by the FCC and
satisfaction of other customary closing conditions. Because WWMT-TV and WLAJ-TV
operate in overlapping service areas, Freedom will be required to obtain a
waiver from the FCC of its local television multiple ownership rules.

Note 3  -  Basic and diluted net loss per common share

Basic and diluted net loss per common share for the three months ended March 31,
1998 and 1997 is computed in accordance with Statement of Financial Accounting
Standards No. 128 "Earnings per Share" and is calculated by dividing net loss
attributable to common stockholders by the weighted average number of shares of
common stock outstanding. The inclusion of additional shares of common stock
equivalents would have been antidilutive for both periods presented.

                                       -5-
<PAGE>
 
Note 4  -  Recent pronouncements

In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 130 "Reporting Comprehensive
Income" which is effective for fiscal periods beginning after December 15, 1997.
SFAS No. 130 establishes standards for reporting and displaying comprehensive
income and its components. The Company believes SFAS No. 130 will not have an
effect on the manner in which the Company currently reports.

In June 1997, the FASB issued SFAS No. 131 "Disclosures About Segments of an
Enterprise and Related Information" which is effective for fiscal periods
beginning after December 15, 1997. SFAS No. 130 establishes standards for
reporting information about operating segments and for related disclosures about
products, services, geographic areas and major customers. The Company has not
yet made a determination of the effect, if any, that SFAS will have on the
manner in which the Company currently reports.




                                       -6-
<PAGE>
 
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

The Company is a group broadcaster which operates eleven network-affiliated
television stations and one radio station. The Company's revenues are derived
principally from local and national advertising and, to a lesser extent, from
network compensation for the broadcast of programming and revenues from studio
rental and commercial production activities. The primary operating expenses
involved in owning and operating television stations are employee salaries,
depreciation and amortization, programming and advertising and promotion
expenses. It is anticipated that comparisons of the Company's consolidated
financial statements for the year ended December 31, 1998 against prior periods
will be affected by the pending acquisition of KOFY-TV and the pending sale of
WWMT-TV and WLAJ-TV. Numbers referred to in the following discussion have been
rounded to the nearest thousand.

Certain sections of this Form 10-Q contain various foward looking statements 
within the meaning of Section 21E of the Securities Exchange Act of 1934, which 
represent the Company's expectations or beliefs concerning future events. The 
forward looking statements include, without limitation, the Company's ability to
meet its future liquidity needs. The Company cautions that these forward 
statements are further qualififed by important factors that could cause actual 
results to differ materially from those in the forward looking statements. Such 
factors include, without limitation, general economic conditions, competition in
the markets in which the Company's stations are located, technological change 
and innovation in the broadcasting industry and proposed legislation.

The following table sets forth certain operating data for the three months ended
March 31, 1998 and 1997:

<TABLE>
<CAPTION>
                                                    Three months ended March 31,
                                                    ----------------------------
                                                        1998              1997
                                                   -----------       -----------
<S>                                                <C>               <C>        
Operating income                                   $ 6,961,000       $ 6,139,000
Add:
    Time brokerage agreement fees                      150,000           150,000
    Depreciation and amortization                    4,949,000         4,546,000
    Corporate expense                                2,017,000         1,474,000
    Non-cash compensation                              332,000           192,000
                                                   -----------       -----------

Broadcast cash flow                                $14,409,000       $12,501,000
                                                   ===========       ===========
</TABLE>

"Broadcast cash flow" means operating income plus time brokerage agreement fees,
depreciation, amortization, corporate expense and non-cash compensation. The
Company has included broadcast cash flow data because such data are commonly
used as a measure of performance for broadcast companies and are also used by
investors to measure a company's ability to service debt. Broadcast cash flow is
not, and should not be used as, an indicator or alternative to operating income,
net income or cash flow as reflected in the consolidated financial statements,
is not a measure of financial performance under generally accepted accounting
principles and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with generally accepted
accounting principles.

Three months ended March 31, 1998 and 1997

Net revenue for the three months ended March 31, 1998 totaled $36,724,000, an
increase of $4,426,000 or 14 percent compared to $32,298,000 for the three
months ended March 31, 1997. Of this increase, $1,193,000 was due to the
inclusion of one additional month of operations of WDWB-TV. The remaining
increase was primarily due to significant increases in advertising revenue
driven by Olympic spending at the Company's CBS affiliated stations, substantial
advertising revenue growth at WDWB-TV, increased political advertising revenue
in an election year, and strong non-political local advertising in virtually all
Granite markets.


                                       -7-
<PAGE>
 
Station operating expenses totaled $22,315,000 for the three months ended March
31, 1998, an increase of $2,518,000 or 13 percent compared to $19,797,000 for
the three months ended March 31, 1997. Of this increase, $733,000 was due to the
inclusion of one additional month of operations of WDWB-TV. The remaining
increase was primarily due to investments made in programming, promotion and
sales at WDWB-TV, as well as investments made in programming, news and sales at
the Company's other stations.

Depreciation and amortization increased $403,000, or 9 percent during the three
months ended March 31, 1998 compared to the same period a year earlier primarily
due to the inclusion of one additional month of operations of WDWB-TV. Corporate
expense increased $543,000 or 37 percent during the three months ended March 31,
1998 compared to the same period a year earlier, primarily due to higher
administrative costs associated with the expansion of the Company's corporate
office to manage its expanded station group. Non-cash compensation expense
increased $140,000 or 73 percent during the three months ended March 31, 1998
compared to the same period a year earlier due to the granting of additional
awards payable in Common Stock (Nonvoting) to certain executive employees of the
Company under the Management Stock Plan.

The equity in net loss of investee of $487,000 for the three months ended March
31, 1998 resulted from the Company recognizing its pro rata share of the net
loss of Datacast, LLC under the equity method of accounting.

Net interest expense was $9,209,000 compared to $9,778,000 a year earlier, a
decrease of $569,000 or 6 percent. This decrease was achieved despite higher
levels of outstanding indebtedness during the three months ended March 31, 1998
as compared to the same period a year earlier. During 1997, the Company was able
to reduce its cost of borrowing when it repurchased $79,405,000 of its
high-yield debt with borrowings under its credit agreement, which bear interest
at a lower rate.

Loss before extraordinary item for the three months ended March 31, 1998 totaled
$3,947,000 compared to a loss before extraordinary item of $4,957,000 for the
same period a year earlier, a decrease of $1,010,000. The decrease was primarily
due to the changes in the line items discussed above.

During the three months ended March 31, 1997, the Company purchased $19,405,000
face amount of its 9-3/8% Senior Subordinated Notes, due December 1, 2005, at a
discount and replaced it with borrowings under its credit agreement which bear
interest at a lower rate, thereby reducing its cost of borrowing. In conjunction
with the repurchase of this debt, the Company recognized an extraordinary loss,
after the write-off of a portion of related deferred financing fees, of
$321,000.

Liquidity and Capital Resources

On October 3, 1997, the Company entered into a definitive agreement to acquire
KOFY-TV for $143,750,000 in cash and the assumption of certain liabilities. In
addition, the Company will pay $30,000,000 for a covenant not to compete in the
San Francisco-Oakland-San Jose television market for a period of five years from
the closing of the acquisition. The acquisition is expected to close in the
third quarter of this year.

On February 19, 1998, the Company entered into a definitive agreement with
Freedom Communications, Inc. ("Freedom") whereby Freedom will acquire the assets
of WWMT-TV and WLAJ-TV for $170,000,000 payable in cash at the closing of the
transaction. The closing of the sale is expected to occur in the second quarter
of this year. The Company anticipates recognizing a taxable gain of $70,000,000
which will utilize substantially all of the Company's net operating loss
carryforwards. The Company anticipates paying state and federal alternative
minimum taxes of approximately $2,400,000 relating to the sale. It is
anticipated that the net proceeds from the sale will be used to fund part of the
purchase price of KOFY-TV.


                                       -8-
<PAGE>
 
The WB Network agreed to enter into a ten-year affiliation agreement with the
Company, instead of with another television station in the San Francisco market,
in return for total consideration of $22,500,000. The Company will pay
$12,500,000 to the WB Network at the closing of the KOFY-TV purchase and the
remaining $10,000,000 is to be paid in equal installments over a five year
period.

The Company's existing credit agreement allows for revolving credit borrowings
of $200,000,000 and permits borrowings of up to $300,000,000 in the aggregate.
The revolving credit facility can be used to fund future acquisitions of
broadcast stations and for general corporate purposes. As of April 24, 1998, the
Company had $135,000,000 of the revolving credit facility borrowings
outstanding and approximately $23,000,000 of borrowings available for
acquisitions and working capital purposes. The Company expects to enter into a
new credit agreement prior to consummation of the acquisition of KOFY-TV that,
among other things, will increase the amount of the Company's permitted
indebtedness to 7.25 times its earnings before interest, taxes, depreciation and
amortization ("EBITDA"), as defined therein, for the most recent four fiscal
quarters. At March 31, 1998, after giving effect to the acquisition of KOFY-TV,
and the related borrowings under the new credit agreement and the disposition of
WWMT-TV and WLAJ-TV, the Company's ratio of total indebtedness to EBITDA, as
expected to be defined in the new credit agreement, would have been 7.09 times.

Cash flows provided by operating activities were $10,430,000 during the three
months ended March 31, 1998 compared to cash flows provided by operating
activities of $8,698,000 during the three months ended March 31, 1997, an
increase of $1,732,000 or 20 percent. The increase was primarily due to higher
broadcast cash flow.

Cash flows used in investing activities were $898,000 during the three months
ended March 31, 1998 compared to $173,621,000 during the three months ended
March 31, 1997. Cash flows used in investing activities during the three months
ended March 31, 1998 related to capital expenditures and the investment in
Datacast while cash flows used in investing activities during the three months
ended March 31, 1997 related primarily to the acquisition of WDWB-TV. The
Company anticipates that future requirements for capital expenditures will
include those incurred during the ordinary course of business, which include
costs associated with the implementation of digital television technology.

Cash flows used in financing activities were $7,758,000 during the three
months ended March 31, 1998 compared to cash flows provided by financing
activities of $165,748,000 during the three months ended March 31, 1997. The
decrease resulted primarily from the issuance of the 12-3/4% Cumulative
Exchangeable Preferred Stock during the three months ended March 31, 1997
and a net decrease in long term borrowings for the three months ended March 31,
1998.

The computer applications which the Company utilizes in its operations are not
complex. Any modification of the Company's software that may be needed in order
to handle the upcoming change in the century is covered under the software's
licensing agreement. The Company has determined that there will be no material
costs incurred to modify its applications in order to handle the upcoming change
in the century.

The Company believes that internally generated funds from operations and
borrowings under its credit agreement, if necessary, will be sufficient to
satisfy the Company's cash requirements for its existing operations for the next
twelve months and for the foreseeable future thereafter. The Company expects
that any future acquisistions of television stations would be financed through
funds generated from operations and additional debt and equity financings.


                                       -9-
<PAGE>
 
                                     PART II

                                OTHER INFORMATION


ITEM 6.  Exhibits and Reports on Form 8-K

       a.     Exhibits

              4.48   Third Amendment, dated April 16, 1998, to the Third Amended
                     and Restated Credit Agreement, dated September 4, 1996,
                     among Granite Broadcasting Corporation, the Lenders named
                     therein, Bankers Trust Company, as Agent, and The Bank of
                     New York, First Union National Bank of North Carolina,
                     Goldman Sachs Credit Partners L.P. and Union Bank of
                     California, as Co-Agents.

              10.19  Granite Broadcasting Corporation Directors' Stock Option
                     Plan, as amended on August 25, 1997.

              11.    Statement of Computation of Per Share Earnings

              27.    Financial Data Schedule


                                      -10-
<PAGE>
 
                                   SIGNATURES

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



                                          GRANITE BROADCASTING CORPORATION
                                                       Registrant


Date: May 1, 1998                         /s/ W. DON CORNWELL
                                          -------------------------------------
                                                 (W. Don Cornwell)
                                                  Chief Executive Officer

Date: May 1, 1998                         /s/ LAWRENCE I. WILLS
                                          --------------------------------------
                                                    (Lawrence I. Wills)
                                          Vice President, Finance and Controller
                                            (Principal Accounting Officer)