**EXHIBIT 99**

 

 
| Press Contact: W.  Don Cornwell |       |                      |
|---------------------------------|------------|---------------------------|
| Analyst Contact:  Larry Wills   |       |                      |
| Telephone:  212/826-2530        |       |                      |
|                            |       |                      |
| ** **                      | ** ** | **FOR IMMEDIATE RELEASE** |

# ** **

**GRANITE BROADCASTINGREPORTS**

**FIRST QUARTER 2005RESULTS**

** **

**-Results Substantially ExceedGuidance-**

**-Cost Reduction Initiatives Result in ImprovedMargins-**

**-Commences Shared Services with Malara BroadcastGroup-**

 

NEWYORK, May 2, 2005 —****GraniteBroadcasting Corporation (OTCBB: GBTVK) today reported results for the firstquarter of 2005.  First quarter revenue,including the results of the two new stations consolidated as a result of theMalara transaction, decreased 1.0 percent in the quarter.  Excluding the results of the two newstations, net revenue decreased 3.9 percent, exceeding guidance provided by theCompany in its press release dated March 9, 2005, which called for arevenue decrease of 6.5 to 7.5 percent.

 

Commenting on the results, W. Don Cornwell, Chairman and ChiefExecutive Officer, said, “We are pleased to report a successful quarter onseveral fronts. Our results significantly overachieved guidance as our stationsreplaced a substantial amount of political revenue from last year’s firstquarter.  We successfully implemented theshared service arrangements with Malara Broadcast Group in Fort Wayne, Indianaand Duluth, Minnesota, and we launched new local sales initiatives in many ofour markets.  In addition, ourprogramming and corporate costs continue to decline, and as a result, ourmargins are expanding.”

 

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John Deushane, Chief Operating Officer, said, “Our station groupreplaced most of the $1.3 million of political in last year’s first quarterthrough impressive local revenue gains. Local non-political advertising revenue increased a very healthy 7.5percent at our Big Three affiliates, excluding the two new stationsconsolidated as a result of the Malara transaction. In addition, localnon-political revenue increased by over 20 percent at our Detroit WB affiliateand national non-political revenue was up 6 percent, as the station continuesto benefit from its long-term partnership with the Detroit Pistons.  The Pistons relationship also helped toincrease our station’s average weekly cumulative audience by nearly 100,000viewers in February, resulting in ratings improvements in other dayparts.”

 

Mr. Deushane continued, “Through the hard work of Graniteemployees across the Company, we successfully executed on the implementation ofa shared service arrangement with Malara Broadcast Group in Fort Wayne and Duluth.  We have accomplished over 70 percent of thecost benefits from the arrangement within the first month of operation, and ourplan is on track to achieve all of the expected $4.0 million of annualized costbenefits within the first year.  Bysharing certain services such as advertising sales, promotion andadministrative functions with the Malara station in each of these markets, wewill measurably improve operating margins and drive future cash flows, whileensuring that each station remains financially viable and able to continueserving its local community amid what has become an increasingly competitivemedia environment.”

 

Larry Wills, Chief Financial Officer, said, “Corporate expense declined11 percent in the first quarter, as we benefited from our ongoing focus oncosts and the consolidation of certain corporate functions in 2004.  We expect full-year 2005 corporate expense todecline approximately 25 percent.”

 

Mr. Cornwell concluded, “While 2005 will be a challenging year forour industry due to last year’s Olympic and political advertising, we areoptimistic about Granite’s growth prospects for the rest of the year.  The integration of the Malara stations alongwith our on-going, cost-saving initiatives will allow us to generate growth incash flow and further improve our margins. We have a proven track record of profitably operating news-oriented, BigThree affiliated stations, and will continue to pursue additional opportunitiesto realign our asset mix.  In addition,we remain focused on making improvements to our capital structure and lookforward to updating you as we move forward with our strategic initiatives.”

 

**FIRST QUARTER RESULTS**

**THREE MONTHS ENDED MARCH 31, 2005**

**VERSUS THREE MONTHS ENDED MARCH 31, 2004**

 

Net revenue decreased 1.0 percent or $264,000 to $25.7 million.Decreases in political advertising revenue and national non-politicaladvertising revenue were largely offset by an increase in local non-politicaladvertising revenue and the inclusion of 23 days of operations of the Fort WayneNBC affiliate and the Duluth CBS affiliate in 2005.

 

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Station operating expenses were essentially flat at $21.1 million.Lower film amortization expense at the Company’s WB affiliates and reducedcosts at the Buffalo ABC affiliate were offset by the inclusion of 23 days ofoperations of the Fort Wayne NBC affiliate and the Duluth CBS affiliate in2005.

 

**Big Three Affiliates**

Net revenue at the Big Three affiliates increased about 1.0 percent.Decreases in political advertising revenue and national non-politicaladvertising revenue were offset by a 7.5 percent increase in localnon-political advertising revenue and the inclusion of 23 days of operations ofthe Fort Wayne NBC affiliate and the Duluth CBS affiliate in 2005. The BigThree affiliates contributed 69 percent to net revenue during the quarter.

 

Station operating expenses at the Big Three affiliates increased 4.7percent.  Decreases in operating expensedue to cost-savings initiatives at the Buffalo ABC affiliate were offset byincreases in health care and other personnel costs at all stations and theinclusion of 23 days of operations of the Fort Wayne NBC affiliate and theDuluth CBS affiliate in 2005.

 

**WB Affiliates**

Net revenue at the WB affiliates decreased 4.9 percent.  A healthy 13 percent net revenue gain at theDetroit WB affiliate was offset by a decrease in net revenue at the SanFrancisco WB affiliate of 17 percent due to a soft advertising market anddeclines in the movie category.  The WBaffiliates contributed 31 percent to net revenue during the quarter.

 

Station operating expenses at the WB affiliates decreased 7.5 percentdue primarily to decreased film amortization expense.

 

The Company has made substantial progress replacing unprofitableprogramming at its WB affiliates with competitive, profitable programming. TheCompany achieved a 6.4 percent reduction in annual cash programming payments atits WB affiliates in 2004 versus 2003, and anticipates a 12 percent reductionin 2005 versus 2004 and a 50 percent reduction by 2007 versus 2003.

 

**Malara Broadcast Group**

Granite has entered intoa strategic arrangement with Malara Broadcast Group (“Malara”) under whichGranite is providing advertising sales, promotion and administrative servicesand selected programming to certain Malara-owned stations. Such an arrangementwill enable Malara and Granite to utilize their resources more efficiently,resulting in overall enhanced news operations and expanded news coverage forthe local communities they serve.

 

Malara took ownership ofWPTA, the ABC affiliate in Fort Wayne, Indiana, on March 7, 2005 and KDLH,the CBS affiliate in Duluth, Minnesota-Superior, Wisconsin, on March 8,2005.  Granite owns and operates KBJR,the NBC affiliate in Duluth, Minnesota-Superior, Wisconsin and took ownershipof WISE, the NBC affiliate in Fort Wayne,

 

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Indiana, on March 8,2005. To finance these acquisitions, Malara entered into a senior creditfacility consisting of two term loans totaling $48.5 million and a revolvingcredit facility of $5 million.  The $23.5million Term Loan A is secured by a letter of credit. Granite has pledged $25million of U.S. Government Securities it purchased with cash on hand to securethe letter of credit.  The $25 millionTerm Loan B and the $5 million revolver are secured by the assets of the Malarastations, and guaranteed on an unsecured basis by Granite.

 

Although Granite does notown or control Malara or Malara’s television stations, for accounting purposes,Granite is deemed to be the primary beneficial interest holder in Malara, asdefined in Financial Accounting Standards Board’s Interpretation No. 46, “Consolidationof Variable Interest Entities” (FIN 46), due to its guarantee of Malara’sfinancing and its arrangements under the shared service and other agreements.As a result, consistent with FIN 46 Granite consolidates Malara’s financialposition, results of operations and cash flows. Malara maintains complete responsibility for and control over theprogramming, finances, personnel and operations of its stations.

 

**SECOND QUARTER 2005 GUIDANCE**

**Includes consolidated results ofMalara Broadcast Group**

 

Commenting on the outlookfor the quarter ending June 30, 2005, Larry Wills, Chief FinancialOfficer, said, “We expect to see healthy non-political local revenue growth atthe Big Three affiliates and continued momentum at our Detroit WBaffiliate.  Our San Francisco WBaffiliate continues to be impacted by a weak advertising market and toughcomparisons against last year’s second quarter, when local non-politicaladvertising increased over 13 percent. At this time, including the results ofthe two new stations consolidated as a result of the Malara transaction, weexpect to report a second quarter net revenue increase of 4 to 7 percent andsecond quarter station operating expenses to increase between 1.0 and 2.0percent.”  (See Table 2).

 

**Second Quarter Guidance on Other Income StatementItems**

•                  Depreciationexpense is expected to be approximately $1.9 million in the second quarter.

•                  Amortizationexpense is expected to be approximately $2.2 million in the second quarter.

•                  Corporateexpense (excluding performance awards) is expected to be approximately $2.5million in the second quarter.

•                  Performanceaward expense for awards granted on February 25, 2003 is expected to be$320,000 in the second quarter.

•                  Non-cashcompensation expense is expected to be approximately $95,000 for the secondquarter.

•                  Interestexpense is expected to be approximately $11.1 million in the second quarter.

•                  Non-cashinterest expense is expected to be approximately $1.2 million in the secondquarter.

 

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•                  Non-cashpreferred stock dividend is expected to be approximately $6.4 million in thesecond quarter.

•                  Capitalexpenditures are expected to be approximately $2.0 million in the secondquarter and $5.0 million for the full year.

 

Granite will host ateleconference to discuss its first quarter 2005 results on Monday, May 2,2005 at 10:30 a.m. Eastern Daylight Time. To access the teleconference, please dial 212-896-6053 ten minutes prior to thestart time.  The teleconference will alsobe available via live webcast on the investor relations portion of the Company’swebsite, located at www.granitetv.com. If you cannot listen to the teleconference at its normal time, therewill be a replay available through May 9, 2005 at noon Eastern DaylightTime, and can be accessed by dialing 1-800-633-8284 (US callers) or +1-402-977-9140(International callers), passcode: 21242802. The webcast will also be archived on the Company’s website for 30 days.

 

*  *  *  *

 

This press releasecontains forward-looking statements within the meaning of Section 21E ofthe Securities Exchange Act of 1934, which represent the Company’s expectationsor beliefs concerning future events. These forward-looking statements generallycan be identified as statements that include phrases such as “believe”, “expect”,“anticipate”, “intend”, “plan”, “foresee”, “likely”, “will”, “should” or othersimilar words or phrases. The Company cautions that these statements arefurther qualified by important factors that could cause actual results todiffer materially from those in the forward looking statements. Such factorsinclude, without limitation, general economic conditions, competition in themarkets in which the Company’s stations are located, technological change andinnovation in the broadcasting industry and proposed legislation. Consequently,all forward-looking statements made herein are qualified by these cautionarystatements and the cautionary language set forth in the Company’s most recentAnnual Report on Form 10-K and other documents filed with the Securitiesand Exchange Commission. There can be no assurance that the actual results,events or developments referenced herein will occur or be realized. The Companyassumes no obligation to update these forward-looking statements to reflectactual results, changes in assumptions or changes in factors affecting suchforward-looking statements.

 

Granite BroadcastingCorporation (OTC Bulletin Board: GBTVK) owns and operates, or providesprogramming, sales and other services to 13 television stations in thefollowing 8 markets: San Francisco, California, Detroit, Michigan, Buffalo, NewYork, Fresno, California, Syracuse, New York, Fort Wayne, Indiana, Peoria,Illinois, and Duluth, Minnesota-Superior, Wisconsin. The Company’s televisionstation group includes affiliates of the NBC, CBS, ABC, WB and UPN networks,and reaches approximately 6% of all U.S. television households.

 

(Financial tables are attached)

 

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**Table 1**

**Financial Results (Unaudited)**

(inthousands, except per share data and number of shares)

 

GRANITE BROADCASTINGCORPORATION

 
| ** **                                    | ** ** | **Three Months Ended March 31,** | ** ** |
|-----------------------------------------------|------------|---------------------------------------|------------|
| ** **                                    | ** ** | **2005**                              | ** ** | **2004** | ** ** |
|                                          |       |                                  |       |   |   |
| Net revenue                                   |       | $                                     | 25,737     |   | $ | 26,001 |   |
| Station  operating expenses                   |       | 21,148                                |       | 21,091 |   |
| Depreciation  expense                         |       | 1,829                                 |       | 1,763 |   |
| Amortization  expense                         |       | 2,040                                 |       | 1,882 |   |
| Corporate expense                             |       | 2,698                                 |       | 3,021 |   |
| Performance  award expense                    |       | 320                                   |       | 524 |   |
| Non-cash  compensation expense                |       | 95                                    |       | 303 |   |
| Operating loss                                |       | (2,393                                | )          | (2,583 | ) |
|                                          |       |                                  |       |   |   |
| Interest expense                              |       | 10,190                                |       | 9,873 |   |
| Interest income                               |       | (449                                  | )          | (232 | ) |
| Non-cash  interest expense                    |       | 1,073                                 |       | 1,146 |   |
| Non-cash  preferred stock dividend            |       | 6,387                                 |       | 6,387 |   |
| Other expense                                 |       | 79                                    |       | 140 |   |
|                                          |       |                                  |       |   |   |
| Loss before  income taxes                     |       | (19,673                               | )          | (19,897 | ) |
| Benefit for  income taxes                     |       | (179                                  | )          | (2,484 | ) |
| Net loss                                      |       | $                                     | (19,494    | ) | $ | (17,413 | ) |
| Net loss  attributable to common shareholders |       | $                                     | (19,494    | ) | $ | (17,413 | ) |
|                                          |       |                                  |       |   |   |
| Per basic and  diluted common share:          |       |                                  |       |   |   |
| Basic and  diluted net loss per share         |       | $                                     | (1.00      | ) | $ | (0.90 | ) |
| Weighted average  common shares outstanding   |       | 19,501,000                            |       | 19,319,000 |   |
|                                          |       |                                  |       |   |   |
| Supplemental  Financial Data:                 |       |                                  |       |   |   |
| Capital  expenditures                         |       | $                                     | 242        |   | $ | 1,265 |   |
| Program  amortization                         |       | $                                     | 3,935      |   | $ | 4,808 |   |
| Program payments                              |       | $                                     | 5,712      |   | $ | 6,218 |   |

 

-MORE-

 

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**Table 2**

**Second Quarter 2005 Guidance (Unaudited)**

(in thousands)

 

GRANITE BROADCASTINGCORPORATION

 
| ** **                     | ** ** | **Three Months Ended June 30,** | ** ** | ** ** | ** ** | ** **         | ** ** |
|--------------------------------|------------|--------------------------------------|------------|------------|------------|--------------------|------------|
| ** **                     | ** ** | **2004**                             | ** ** | **2005**   | ** ** | **Percent Change** | ** ** |
| ** **                     | ** ** | ** **                           | ** ** | **High**   | ** ** | **Low**            | ** ** | **High** | ** ** | **Low** | ** ** |
|                           |       |                                 |       |       |       |               |       |   |   |   |   |
| Net revenue                    |       | $                                    | 29,163     |       | $          | 31,205             |       | $ | 30,330 |   | 7.0 | % | 4.0 | % |
| Station  operating expenses    |       | 22,312                               |       | 22,535     |       | 22,758             |       | 1.0 | % | 2.0 | % |
| Depreciation  expense          |       | 1,724                                |       | 1,900      |       | 1,900              |       |   |   |   |   |
| Amortization  expense          |       | 1,882                                |       | 2,218      |       | 2,218              |       |   |   |   |   |
| Corporate  expense             |       | 3,478                                |       | 2,489      |       | 2,489              |       |   |   |   |   |
| Performance  award expense     |       | —                               |       | 320        |       | 320                |       |   |   |   |   |
| Non-cash  compensation expense |       | 132                                  |       | 95         |       | 95                 |       |   |   |   |   |
| Operating income  (loss)       |       | $                                    | (365       | )          | $          | 1,648              |       | $ | 550 |   |   |   |   |   |
|                           |       |                                 |       |       |       |               |       |   |   |   |   |
| Supplemental  Financial Data:  |       |                                 |       |       |       |               |       |   |   |   |   |
| Program  amortization          |       | $                                    | 4,716      |       | $          | 3,904              |       | $ | 3,904 |   |   |   |   |   |
| Program payments               |       | $                                    | 6,098      |       | $          | 5,838              |       | $ | 5,838 |   |   |   |   |   |

 

-END-

 

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