<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 June 30, 1999

                                      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                  (I.R.S. Employer
incorporation 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 August 10, 1999; Common Stock (Nonvoting), par value $.01 per
share - 11,864,355 shares outstanding at August 10, 1999.
<PAGE>

                         PART I. FINANCIAL INFORMATION
                       GRANITE BROADCASTING CORPORATION
                          CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                                         June 30,                    December 31,
ASSETS                                                                                     1999                         1998
------                                                                               ----------------              ---------------
                                                                                       (Unaudited)
<S>                                                                                 <C>                         <C>
Current assets:
   Cash and cash equivalents                                                        $       2,507,986           $          762,392
   Accounts receivable, net                                                                34,599,402                   32,830,227
   Film contract rights                                                                     4,568,711                    9,671,443
   Other assets                                                                            10,068,384                    9,627,807
   Net assets held for sale (Note 2)                                                       53,317,458                          ---
                                                                                    -----------------           ------------------
     Total current assets                                                                 105,061,941                   52,891,869

Property and equipment, net                                                                31,560,000                   33,040,152
Film contract rights and other noncurrent assets                                            5,535,941                    7,286,039
Deferred financing fees, net                                                               10,661,098                   11,086,733
Intangible assets, net                                                                    616,657,334                  677,669,324
                                                                                    -----------------           ------------------
                                                                                    $     769,476,314           $      781,974,117
                                                                                    =================           ==================

LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------

Current liabilities:
   Accounts payable                                                                 $       5,441,036           $        4,031,837
   Accrued interest                                                                         5,139,769                    5,107,551
   Other accrued liabilities                                                                8,574,622                    9,908,091
   Film contract rights                                                                     7,326,993                   13,648,629
   Other current liabilities                                                                6,246,076                    5,763,882
                                                                                    -----------------           ------------------
     Total current liabilities                                                             32,728,496                   38,459,990

Long-term debt                                                                            433,937,145                  426,399,159
Film contract rights payable                                                                4,319,113                    5,920,122
Deferred tax liability                                                                     74,693,655                   78,308,597
Other noncurrent liabilities                                                               16,905,934                   18,005,696

Commitments
Cumulative Exchangeable Preferred Stock, net of offering costs                            197,551,275                  185,167,313
Cumulative Convertible Exchangeable Preferred Stock                                        30,610,975                   31,183,400

Stockholders' deficit:
   Common Stock: 41,000,000 shares authorized consisting of 1,000,000 shares of
     Class A Common Stock, $.01 par value, and 40,000,000 shares of Common Stock
     (Nonvoting), $.01 par value; 178,500 shares of Class A Common Stock and
     11,828,680 shares of Common Stock (Nonvoting) (11,608,032
     shares at December 31,1998) issued and outstanding                                       120,071                      117,865
   Additional paid-in capital                                                               1,565,370                   14,233,125
   Accumulated deficit                                                                    (19,381,970)                 (12,006,267)
   Less: Unearned compensation                                                             (2,639,875)                  (2,881,008)
         Treasury stock                                                                       (47,000)                     (47,000)
         Note receivable from officer                                                        (886,875)                    (886,875)
                                                                                    -----------------           ------------------
     Total stockholders' deficit                                                          (21,270,279)                  (1,470,160)
                                                                                    -----------------           ------------------
                                                                                    $     769,476,314            $     781,974,117
                                                                                    =================           ==================
</TABLE>

                            See accompanying notes.

                                      -1-
<PAGE>

                       GRANITE BROADCASTING CORPORATION
                     CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                             Three Months Ended June 30,           Six Months Ended June 30,
                                                         ------------------------------------ -------------------------------------
                                                                1999              1998               1999               1998
                                                         ------------------ ----------------- ------------------- -----------------
                                                                     (Unaudited)                           (Unaudited)
<S>                                                      <C>                <C>               <C>                 <C>
Net revenues                                                  $ 40,925,410       $ 43,735,105     $  74,800,227      $  80,459,141
Station operating expenses                                      22,633,953         22,372,096        45,158,937         44,687,464
Time brokerage agreement fees                                          ---            166,686               ---            316,686
Depreciation expense                                             1,412,958          1,381,218         2,800,215          2,745,837
Amortization expense                                             6,434,383          3,594,790        12,842,898          7,178,512
Corporate expense                                                2,734,886          1,934,569         4,707,024          3,951,632
Non-cash compensation expense                                      259,610            216,708           523,708            549,228
                                                         ------------------ ------------------ ----------------- ------------------

Operating income                                                 7,449,620         14,069,038         8,767,445         21,029,782

Other expenses:
   Equity in net loss of investee                                      ---            486,719           133,603            973,439
   Interest expense, net                                        10,000,997          9,586,521        19,998,773         18,795,259
   Non-cash interest expense                                       753,239            434,134         1,460,466            908,923
   Gain from insurance settlement                               (2,655,408)               ---        (2,655,408)               ---
   Other                                                           327,064            275,090           670,704            516,615
                                                         ------------------ ------------------ ----------------- ------------------
Income (loss) before income taxes and extraordinary
   item                                                           (976,272)         3,286,574       (10,840,693)          (164,454)
Provision (benefit) for income taxes                               (23,990)         2,675,000        (3,464,990)         3,171,000
                                                         ------------------ ------------------ ----------------- ------------------

Income (loss) before extraordinary item                           (952,282)           611,574        (7,375,703)        (3,335,454)
Extraordinary loss on early extinguishment
  of debt, net of tax                                                  ---         (2,739,738)              ---         (2,739,738)
                                                         ------------------ ------------------ ----------------- ------------------

Net loss                                                      $   (952,282)     $  (2,128,164)    $  (7,375,703)     $  (6,075,192)
                                                         ================== ================== ================= ==================

Net loss attributable to common shareholders                  $ (7,924,234)     $  (8,551,527)    $ (20,945,944)     $ (18,611,990)
                                                         ================== ================== ================= ==================

Per common share:
   Basic and diluted loss before extraordinary item           $      (0.66)     $       (0.59)    $       (1.75)     $       (1.63)
   Basic and diluted extraordinary loss                                ---              (0.28)              ---              (0.28)
                                                         ================== ================== ================= ==================
   Basic and diluted net loss                                 $      (0.66)     $       (0.87)    $       (1.75)     $       (1.91)
                                                         ================== ================== ================= ==================

Basic and diluted weighted average common shares
   outstanding                                                  11,997,847          9,959,021        11,944,296          9,717,311
</TABLE>

                            See accompanying notes.

                                      -2-
<PAGE>

                       GRANITE BROADCASTING CORPORATION
                CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

                        Six Months Ended June 30, 1999
                                  (Unaudited)

<TABLE>
<CAPTION>
                                               Class A             Common            Additional
                                               Common              Stock               Paid-in             Accumulated
                                                Stock           (Nonvoting)            Capital               Deficit
                                          ----------------    ---------------    ------------------    -------------------
<S>                                       <C>                 <C>                <C>                   <C>
Balance at December 31, 1998                    $1,785             $116,080           $14,233,125           $(12,006,267)
Dividends on redeemable
  preferred stock                                                                     (13,320,167)
Accretion of offering costs
  related to Cumulative
  Exchangeable Preferred Stock                                                           (250,074)
Exercise of stock options                                               168                77,232
Conversion of Convertible
  Preferred Stock into Common
  Stock (Nonvoting)                                                   1,145               571,280
Issuance of Common Stock
  (Nonvoting)                                                           893                  (893)
Grant of stock award under
  stock plans                                                                             282,575

Stock expense related to
  stock plans                                                                             (27,708)
Net loss                                                                                                      (7,375,703)
                                          ------------    -----------------    ------------------    -------------------

Balance at June 30, 1999                        $1,785             $118,286            $1,565,370           $(19,381,970)
                                          ============    =================    ==================    ===================

<CAPTION>
                                                                                                              Total
                                              Unearned        Note Receivable         Treasury            Stockholders'
                                            Compensation        from Officer            Stock                Deficit
                                          ----------------    ---------------    ------------------    -------------------
<S>                                       <C>                 <C>                <C>                   <C>
Balance at December 31, 1998                 $(2,881,008)         $(886,875)             $(47,000)           $(1,470,160)
Dividends on redeemable
  preferred stock                                                                                            (13,320,167)
Accretion of offering costs
  related to Cumulative
  Exchangeable Preferred Stock                                                                                  (250,074)
Exercise of stock options                                                                                         77,400
Conversion of Convertible
  Preferred Stock into Common
  Stock (Nonvoting)                                                                                              572,425
Issuance of Common Stock
  (Nonvoting)                                                                                                        -
Grant of stock award under
  stock plans                                   (282,575)                                                            -
Stock expense related to
  stock plans                                    523,708                                                         496,000
Net loss                                                                                                      (7,375,703)
                                          --------------    ---------------    ------------------    -------------------

Balance at June 30, 1999                     $(2,639,875)         $(886,875)             $(47,000)          $(21,270,279)
                                          ==============    ===============   ===================   ====================
</TABLE>

                            See accompanying notes.

                                      -3-
<PAGE>

                       GRANITE BROADCASTING CORPORATION
                     CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                           Six Months Ended June 30,
                                                                                           -------------------------
                                                                                            1999                1998
                                                                                            ----                ----
Cash flows from operating activities:                                                              (Unaudited)
<S>                                                                                 <C>                  <C>
    Net loss                                                                        $    (7,375,703)     $     (6,075,192)
    Adjustments to reconcile net loss to net cash (used in) provided by
      operating activities:
        Amortization of intangible assets                                                12,842,898             7,178,512
        Depreciation                                                                      2,800,215             2,745,837
        Non-cash compensation expense                                                       523,708               549,228
        Non-cash interest expense                                                         1,460,466               908,923
        Equity in net loss of investee                                                      133,603               973,439
        Deferred taxes                                                                   (3,614,942)                  ---
        Gain from insurance proceeds                                                     (2,655,408)                  ---
        Extraordinary loss                                                                      ---             4,214,738
      Change in assets and liabilities:
         (Increase) decrease in accounts receivable, net                                 (1,769,175)              884,881
         Increase in accounts payable and accrued liabilities                               107,948             1,355,675
         Decrease in film contract rights and other current assets                        6,045,726             4,470,668
         Decrease in film contract rights payable and other liabilities                  (7,025,860)           (4,938,876)
         Decrease in other noncurrent liabilities                                        (1,099,762)             (113,898)
         Increase in other assets                                                        (3,551,759)           (3,894,594)
                                                                                    ----------------     -----------------
      Net cash (used in) provided by operating activities                                (3,178,045)            8,259,341
Cash flows from investing activities:
    Insurance proceeds received                                                           5,868,363                   ---
    WB affiliation payment                                                                 (709,908)                  ---
    Investment in Datacast                                                                 (133,603)             (500,000)
    Capital expenditures                                                                 (5,958,642)           (2,443,328)
                                                                                    ----------------     -----------------
      Net cash used in investing activities                                                (933,790)           (2,943,328)
Cash flows from financing activities:
    Proceeds from bank loan                                                              20,500,000                   ---
    Repayment of bank debt                                                              (13,000,000)         (143,000,000)
    Retirement of senior subordinated notes                                                     ---           (24,280,200)
    Proceeds from senior subordinated notes, net                                                ---           174,482,000
    Dividends paid                                                                       (1,188,112)           (1,587,267)
    Payment of deferred financing fees                                                     (503,965)           (6,625,181)
    Other financing activities                                                               49,506               228,987
                                                                                    ---------------      ----------------
      Net cash provided by (used in) financing activities                                 5,857,429              (781,661)
                                                                                    ---------------      -----------------
Net increase in cash and cash equivalents                                                 1,745,594             4,534,352
Cash and cash equivalents, beginning of period                                              762,392             2,170,927
                                                                                    ---------------      ----------------
Cash and cash equivalents, end of period                                            $     2,507,986      $      6,705,279
                                                                                    ===============      ================
Supplemental information:
    Cash paid for interest                                                          $    20,061,000      $     18,739,000
    Income taxes paid                                                                     1,659,000               102,000
    Non-cash capital expenditures                                                            46,000               343,000
    Non-cash dividend                                                                    11,759,000            10,392,000
</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 and six month periods ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1999. For further information, refer to the Company's consolidated
financial statements and notes thereto for the year ended December 31, 1998
which were included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998. All significant intercompany accounts and transactions
have been eliminated. Certain amounts in the prior year have been reclassified
to conform to 1998 presentation. Data at and for the year ended December 31,
1998 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 - Dispositions
---------------------

On April 29, 1999 the Company entered into a definitive agreement with CBS
Corporation ("CBS") whereby CBS will acquire from the Company substantially all
of the assets of KEYE-TV, the CBS affiliate serving Austin, Texas, for
$160,000,000 in cash, subject to certain adjustments. Consummation of the
transaction is contingent upon approval by the Federal Communications Commission
and satisfaction of other customary closing conditions. The sale is expected to
be consummated during the fourth quarter of 1999. For finanacial reporting
purposes, the assets and liabilities of KEYE-TV have been classified on the
accompanying consolidated balance sheet as of June 30 1999 as net assets held
for sale. The Company anticipates recognizing a gain for financial reporting
purposes of approximately $103,000,000. It is anticipated that the proceeds from
the sale will be used to reduce indebtedness, thus providing the Company with
the flexibility necessary to improve its capital structure and lower its cost of
capital.

Note 3 - Long Term Debt
-----------------------

On July 7, 1999, the Company repurchased $2,000,000 principal amount of its 10
3/8% Senior Subordinated Notes, due May 15, 2005 (the "10 3/8% Notes") and
$9,635,000 principal amount of its 8 7/8% Senior Subordinated Notes, due May 15,
2008 (the "8 7/8% Notes"). As a result, the Company will recognize an
extraordinary loss, after the write-off of a portion of related deferred
financing fees, of $174,000 during the third quarter of 1999.

                                      -5-
<PAGE>

Note 4 - Stock Option Grants
----------------------------

In a continuing effort to align the interests of the Company's officers and
certain key corporate and station employees with that of its shareholders, on
January 8, 1999 and February 28, 1999, the Board of Directors granted certain
options to purchase shares of the Company's Common Stock (Nonvoting). The Board
of Directors granted 1,110,000 options, exercisable at $10, which vest as
follows: (i) half when the closing price of the Company's Common Stock
(Nonvoting) averages $15 or more for 10 consecutive business days and (ii) half
when the closing price of the Company's Common Stock (Nonvoting) averages $20 or
more for 10 consecutive business days. The fair market value of the Company's
Common Stock (Nonvoting) on the date of the grant was $6.125. The Board of
Directors also granted 1,132,000 options exercisable at $6.875 and 727,000
options exercisable at $6.125. The exercise price was the fair market value of
the Company's Common Stock (Nonvoting) on the date of grant and the options vest
over four or five years.

Note 5 - Recent Developments
----------------------------

On August 5, 1999, the Federal Communications Commission announced the
relaxation of certain television ownership rules, thus enabling the Company to
continue to own and operate KNTV, the ABC affiliate serving San Jose-Salinas-
Monterey, California, in addition to operating KBWB-TV, the WB affiliate serving
San Francisco-Oakland-San Jose California.

                                      -6-
<PAGE>

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain sections of this Form 10-Q contain various forward 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 and its disclosure concerning Year 2000 issues.
The Company cautions that these forward-looking statements are further qualified
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.

Introduction
------------

The Company is a group broadcaster that operates ten network-affiliated
television stations. 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. Comparisons of
the Company's consolidated financial statements for the three and six months
ended June 30, 1999 against prior periods have been affected by the acquisition
of KBWB-TV, the WB affiliate serving San Francisco-Oakland-San Jose California,
which occurred on July 20, 1998, the sale of WWMT-TV, the CBS affiliate serving
Grand Rapids-Kalamazoo-Battle Creek, Michigan, which occurred on July 15, 1998
and the sale of WLAJ-TV, the ABC affiliate serving Lansing, Michigan, which
occurred on August 17, 1998. It is anticipated that comparisons of the Company's
consolidated financial statements for the year ended December 31, 1999 against
prior periods will also be affected by the aforementioned transactions. Numbers
referred to in the following discussion have been rounded to the nearest
thousand.

                                      -7-
<PAGE>

The following table sets forth certain operating data for the three and six
months ended June 30, 1999 and 1998:

<TABLE>
<CAPTION>
                                       Three Months Ended June 30,       Six Months Ended June 30,
                                       ---------------------------       -------------------------
                                           1999            1998              1999          1998
                                           ----            ----              ----          ----
<S>                                    <C>            <C>               <C>            <C>
Operating income                       $ 7,449,000    $ 14,068,000      $  8,767,000   $21,029,000
Add:
    Time brokerage agreement fees              ---         167,000               ---       317,000
    Depreciation and amortization        7,847,000       4,976,000        15,643,000     9,925,000
    Corporate expense                    2,735,000       1,935,000         4,707,000     3,952,000
    Non-cash compensation                  260,000         217,000           524,000       549,000
                                       -----------    ------------      ------------   -----------

Broadcast cash flow                    $18,291,000    $ 21,363,000      $ 29,641,000   $35,772,000
                                       ===========    ============      ============   ===========
</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 June 30, 1999 and 1998
-----------------------------------------

Net revenue totaled $40,925,000, a decrease of $2,810,000 or 6 percent compared
to $43,735,000 for the three months ended June 30, 1998. The decrease was
primarily due to the loss of political advertising revenue in a non-election
year. The decrease was also due to the loss of revenue from the disposition of
the Kalamazoo and Lansing stations, offset, in part, by the added revenues from
the acquisition of the San Francisco station.

Station operating expenses totaled $22,634,000, an increase of $262,000 or 1
percent compared to $22,372,000 for the three months ended June 30, 1998. The
slight increase was primarily due to increases in programming and promotion
expenses, offset, in part, by an overall reduction in expenses resulting from
the acquisition and dispositions.

Broadcast cash flow (net revenue less station operating expenses) totaled
$18,291,000, a decrease of $3,072,000 or 14 percent compared to $21,363,000 for
the three months ended June 30, 1998. The decrease was primarily due to the
changes in net revenue and station operating expenses discussed above.

                                      -8-
<PAGE>

Amortization expense increased $2,839,000 or 79 percent due to additional
intangible amortization expense associated with the acquisition of the San
Francisco station. Corporate expense increased $800,000 or 41 percent primarily
due to the earlier incurrence of certain expenses. It is anticipated that
corporate expense will decrease during the second half of 1999 as compared to
the same period a year earlier, resulting in a slight increase for the full
year.

Net interest expense increased $415,000 during the three months ended June 30,
1999 as compared to the same period a year earlier. The increase was primarily
due to higher levels of outstanding indebtedness as a result of the acquisition
of the San Francisco station, offset in part, by the results of the Company's
strategic plan to reduce its cost of borrowing. The Company has periodically
repurchased portions of its subordinated debentures using borrowings under its
bank facility, which bear interest at a lower rate.

Non-cash interest expense increased $319,000 or 74% during the three months
ended June 30, 1999 as compared to the same period a year earlier, reflecting
the imputing of interest on a non-interest bearing obligation in connection with
the San Francisco acquisition. The gain on insurance proceeds of $2,655,000
resulted from insurance proceeds that the Company received in excess of the net
book value of assets that were destroyed in a fire at the Company's Duluth
station.

Six months ended June 30, 1999 and 1998
---------------------------------------

Net revenue totaled $74,800,000 a decrease of $5,659,000 or 7 percent compared
to $80,459,000 for the six months ended June 30, 1998. The decrease was
primarily due to the loss of Olympic-related advertising revenue at the
Company's CBS affiliated stations and the loss of political advertising in a
non-election year. The decrease was also due to the loss of revenue from the
disposition of the Kalamazoo and Lansing stations, offset, in part, by the added
revenues from the acquisition of the San Francisco station.

Station operating expenses totaled $45,159,000; an increase of $472,000 or 1
percent compared to $44,687,000 for the six months ended June 30, 1998. The
increase was primarily due to increases in programming and promotion expenses,
offset, in part, by an overall reduction in expenses resulting from the
acquisition and dispositions.

Broadcast cash flow (net revenue less station operating expenses) totaled
$29,641,000, a decrease of $6,131,000 or 17 percent compared to $35,772,000 for
the six months ended June 30, 1998. The decrease was primarily due to the
changes in net revenue and station operating expenses discussed above.

                                      -9-
<PAGE>

Amortization expense increased $5,664,000 or 79 percent due to additional
intangible amortization expense at San Francisco. Corporate expense increased
$755,000 or 19 percent primarily due to the earlier incurrence of certain
expenses. It is anticipated that corporate expense will decrease during the
second half of 1999 as compared to the same period a year earlier, resulting in
a slight increase for the full year. Net interest expense increased $1,204,000
or 6 percent during the six months ended June 30, 1999 as compared to the same
period a year earlier. The increase was primarily due to higher levels of
outstanding indebtedness as a result of the acquisition of the San Francisco
station, offset in part, by the results of the Company's strategic plan to
reduce its cost of borrowing. The Company has periodically repurchased portions
of its subordinated debentures using borrowings under its bank facility, which
bears interest at a lower rate.

Non-cash interest expense increased $552,000 or 61% during the six months ended
June 30, 1999 as compared to the same period a year earlier, reflecting the
imputing of interest on a non-interest bearing obligation in connection with the
San Francisco acquisition. The gain on insurance proceeds of $2,655,000 resulted
from insurance proceeds that the Company received in excess of the net book
value of assets that were destroyed in a fire at the Company's Duluth station.

Liquidity and Capital Resources
-------------------------------

The Company's bank credit agreement (the "Credit Agreement") provides for
revolving credit borrowings of $260,000,000 and permits borrowings of up to an
additional $240,000,000 on an uncommitted basis. The Credit Agreement can be
used to fund future acquisitions of broadcast stations and for general working
capital purposes, subject to certain limitations of the financial covenants
thereunder. As of March 23, 1999, the Company amended the Credit Agreement to
revise the maximum consolidated total debt to consolidated cash flow ratio
covenant contained therein. As of August 10, 1999, the Company had $96,000,000
of borrowings outstanding under the Credit Agreement.

On April 29, 1999, the Company entered into a definitive agreement with CBS
Corporation ("CBS") whereby CBS will acquire from the Company substantially all
of the assets of KEYE-TV, the CBS affiliate serving Austin, Texas, for
$160,000,000 in cash, subject to certain adjustments. Consummation of the
transaction is contingent upon final approval by the Federal Communications
Commission and satisfaction of other customary closing conditions. The sale is
expected to be consummated during the fourth quarter of 1999. The Company
anticipates recognizing a gain for financial reporting purposes of $106,000,000.
It is anticipated that the proceeds from the sale will be used to reduce
indebtedness, thus providing the Company with the flexibility necessary to
improve its capital structure and lower its cost of capital.

The Company anticipates paying 1999 federal and state income taxes of
approximately $29,000,000 during the first quarter of 2000. Such taxes relate
primarily to the gain on the sale of KEYE-TV.

                                     -10-
<PAGE>

Net cash used in operating activities was $3,178,000 during the six months ended
June 30, 1999 compared to net cash provided by operating activities of
$8,259,000 during the six months ended June 30, 1998, a decrease of $11,437,000
or 138 percent. The decrease was primarily due to lower operating cash flow and
a increase in cash used as a result of changes in net operating assets.

Net cash used in investing activities was $934,000 during the six months ended
June 30, 1999 compared to $2,943,000 during the six months ended June 30, 1998.
The decrease was primarily due to insurance proceeds received as reimbursement
for the replacement cost of capital lost in a fire at the Company's Duluth
station. 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 and Year 2000 issues.

Net cash provided by financing activities was $5,857,000 during the six months
ended June 30, 1999 compared to net cash used in financing activities of
$782,000 during the six months ended June 30, 1998. The increase resulted
primarily from a net decrease in bank borrowings and a decrease in payments for
financing fees, offset, in part, by the issuance of subordinated notes during
the six months ended June 30, 1998.

The Company believes that internally generated funds from operations and
borrowings under the Credit Agreement 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 acquisitions of television stations would be financed through funds
generated from operations and additional debt and equity financings

Year 2000
---------

The Company is preparing for the impact of the Year 2000 on its business, as
well as on the businesses of its customers, suppliers and business partners. The
"Year 2000 Issue" is the result of computer programs that were written using two
digits rather than four to define the applicable year. Any of the computer
programs and/or hardware used by the Company that have date-sensitive software
or embedded chips may recognize a date using "00" as the year 1900 rather than
the year 2000. The Year 2000 Issue could result in system failure or
miscalculations in the operations at the Company's broadcast and corporate
locations. The disruption of operations could include, among other things, a
temporary inability to originate and transmit broadcast programming and
commercials, process financial information or engage in other normal business
activity. The Company may also be exposed to risks from third parties with which
the Company interacts who fail to adequately address their own Year 2000 Issues.

                                     -11-
<PAGE>

State of Readiness
------------------

The Company has developed a multiple phase approach to identify and evaluate its
state of Year 2000 readiness for both its information technology (IT) and non-IT
systems. The first phase was to develop a Company-wide, uniform strategy for
addressing the Year 2000 Issue and to assess the Company's current state of Year
2000 readiness. This included an internal review at each location of all IT and
non-IT systems for potential Year 2000 Issues. The Company has completed this
review and has identified the systems that need to be updated or replaced to
ensure Year 2000 compliance. Based on these system evaluations, the Company has
determined that it will be required to modify or replace portions of its
software and certain hardware so that its systems will properly utilize dates
beyond December 31, 1999. The primary systems that are being addressed are the
master control automation systems, IBM AS/400, the computer used to process
sales, traffic, accounts receivable, accounts payable and the general ledger,
and systems with embedded chips, including telephone and security systems.

The next phase was to develop uniform test plans and test methodologies. The
Company has begun to test and update its systems, and expects that all testing
will be completed by the end of August 1999.

Although the Company has not yet completed all necessary phases of its Year 2000
program, it believes that it has an effective program in place to resolve its
critical internal Year 2000 Issues in a timely manner.

Costs to Address the Company's Year 2000 Issues
-----------------------------------------------

The Company will incur capital expenditures and incremental expenses to bring
current systems into compliance. Total incremental expenses have not had a
material impact on the Company's financial condition to date and are not at
present, based on known facts, expected to have a material impact on the
Company's financial condition. The Company estimates the total cost of upgrading
equipment will be approximately $1,500,000, of which approximately $922,000 has
been incurred through June 30, 1999. All Year 2000 expenditures are made out of
each location's operating budget. There are no IT projects that have been
delayed due to Year 2000 efforts.

                                     -12-
<PAGE>

Risks of the Company's Year 2000 Issues
---------------------------------------

While the Company believes its efforts will provide reasonable assurance that
material disruptions will not occur due to internal Year 2000 failures, the
possibility of disruption, especially from third parties, still exists. The
Company's operations are vulnerable to system failures experienced by the
network program providers, certain satellite services, software and hardware
providers, local and long distance telephone providers, power companies,
financial services providers and others upon whom the Company relies for
supporting services. In an effort to determine its vulnerabilities to third-
party Year 2000 failures, the Company has requested Year 2000 compliance data
from all of its suppliers and vendors. The Company will use this information in
an attempt to identify whether any of these parties has a Year 2000 Issue that
may materially impact the Company's operations, liquidity, capital resources or
certain other functions. The Company does not, however, control the systems of
other companies, and cannot assure that these systems will be timely converted
and, if not converted, would not have an adverse effect on the Company's
business operations. In the event that the Company and/or its significant
vendors or suppliers do not complete their Year 2000 compliance efforts, the
Company could experience disruptions in its operations, including a temporary
inability to engage in normal broadcast or business activities. Disruptions in
the economy generally resulting from Year 2000 Issues also could affect the
Company.

Contingency Plan
----------------

The Company is developing a contingency plan to address system failures that are
critical to conduct its business. This plan includes, but is not limited to,
increases in overtime salaries and/or increases in personnel to operate systems
that would ordinarily be operated by a computer. The Company expects to have its
contingency plan completed by September 1999.

Year 2000 Forward-Looking Statements
------------------------------------

The foregoing Year 2000 discussion contains "forward-looking statements" within
the meaning of Section 21E of the Securities Exchange Act of 1934. Such
statements, including without limitation, anticipated costs and the dates by
which the Company expects to complete certain actions, are based on management's
best current estimates, which were derived utilizing numerous assumptions about
future events, including the continued availability of certain resources,
representations received from third parties and other factors. However, there
can be no guarantee that these estimates will be achieved, and actual results
could differ materially from those anticipated. Specific factors that might
cause such material differences include, but are not limited to, the ability to
identify and remediate all relevant IT and non-IT systems, results of Year 2000
testing, adequate resolution of Year 2000 Issues by businesses and other third
parties who are service providers, suppliers or customers of the Company,
unanticipated system costs, the adequacy of and ability to develop and implement
contingency plans and similar uncertainties. The "forward-looking statements"
made in the foregoing Year 2000 discussion speak only as of the date on which
such statements are made, and the Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events.

                                     -13-
<PAGE>

                                    PART II
                                    -------

                               OTHER INFORMATION
                               -----------------


Item 4. Submission of Matters to a Vote of Security Holders
        ---------------------------------------------------

    On April 27, 1999, the holders of all of the Company's Voting Common Stock
adopted resolutions by written consent in lieu of an annual meeting appointing
Ernst & Young LLP as independent auditors of the Company and electing W. Don
Cornwell, Stuart J. Beck, James L. Greenwald, Martin F. Beck, Edward Dugger III,
Thomas R. Settle, Charles J. Hamilton, Jr., Robert E. Selwyn, Jr., M. Fred Brown
and Jon E. Barfield as directors of the Company.

    On July 27, 1999, the holders of all of the Company's Voting Common Stock,
par value $.01 per share, adopted resolutions by written consent in lieu of a
special meeting amending the Granite Broadcasting Corporation Directors' Stock
Option Plan to increase the number of shares of Common Stock (Nonvoting)
authorized for grant under the plan.

Item 6. Exhibits and Reports on Form 8-K
        --------------------------------

      (a) Exhibits

          10.1   Granite Broadcasting Corporation Stock Option Plan, as amended
                 through July 27, 1999.

          10.19  Granite Broadcasting Corporation Directors' Stock Option Plan,
                 as amended through July 27, 1999.

          27.    Financial Data Schedule.

      (b) Reports on Form 8-K

Current Report on Form 8-K filed May 11, 1999, reporting an agreement in
principle entered into by and among the Company, certain of the Company's
subsidiaries and CBS Corporation, a Pennsylvania corporation ("CBS"), whereby
CBS would acquire the assets of KEYE-TV, the CBS affiliate serving the Austin,
Texas television market, for a total purchase price of $160 million in cash,
subject to certain adjustments. No financial statements were filed at such time.

                                     -14-
<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 August 13, 1999             /s/        W. DON CORNWELL
                                 --------------------------------------
                                           (W. Don Cornwell)
                                        Chief Executive Officer


Date August 13, 1999             /s/       LAWRENCE I. WILLS
                                 --------------------------------------
                                          (Lawrence I. Wills)
                                 Vice President, Finance and Controller
                                      (Principal Accounting Officer)