Edgar Filing: NEXSTAR BROADCASTING GROUP INC

nxst2014q1.htm

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, 2014

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: 000-50478

NEXSTAR BROADCASTING GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	23-3083125
(State of Incorporation or Organization)	(I.R.S. Employer Identification No.)

545 E. John Carpenter Freeway, Suite 700, Irving, Texas	75062
(Address of Principal Executive Offices)	(Zip Code)

(972) 373-8800
(Registrant’s Telephone Number, Including Area Code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer	x	Accelerated filer	¨

Non-accelerated filer	¨	Smaller reporting company	¨
(Do not check if a smaller reporting company)

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

As of May 5, 2014, the registrant had 30,622,035 shares of Class A Common Stock and no shares of Class B Common Stock outstanding.

TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION

ITEM 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of March 31, 2014 and December 31, 2013	1

	Condensed Consolidated Statements of Operations for the three months ended March 31, 2014 and 2013	2

	Condensed Consolidated Statement of Changes in Stockholders’ Deficit for the three months ended March 31, 2014	3

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013	4

	Notes to Condensed Consolidated Financial Statements	5

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	33

ITEM 4.	Controls and Procedures	33

PART II	OTHER INFORMATION

ITEM 1.	Legal Proceedings	34

ITEM 1A.	Risk Factors	34

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

ITEM 3.	Defaults Upon Senior Securities	36

ITEM 4.	Mine Safety Disclosures	36

ITEM 5.	Other Information	36

ITEM 6.	Exhibits	37

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

NEXSTAR BROADCASTING GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share information, unaudited)

	March 31, 2014			December 31, 2013
ASSETS
Current assets:
Cash and cash equivalents	$	50,580		$	40,028
Accounts receivable, net of allowance for doubtful accounts of $3,506 and $3,035, respectively		104,457			109,430
Deferred tax assets, net		38,585			38,585
Prepaid expenses and other current assets		10,907			13,123
Total current assets		204,529			201,166
Property and equipment, net		205,477			212,259
Goodwill		198,033			198,052
FCC licenses		247,457			222,757
FCC licenses of consolidated variable interest entities		41,563			66,263
Other intangible assets, net		156,342			162,535
Deferred tax assets, net		26,676			30,898
Other noncurrent assets, net		68,716			69,792
Total assets	$	1,148,793		$	1,163,722
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of debt	$	6,174		$	6,857
Accounts payable		13,651			10,250
Accrued expenses		20,119			24,142
Interest payable		13,593			4,661
Amounts payable to sellers for acquisition of stations		-			22,000
Other current liabilities of consolidated variable interest entities		5,437			4,923
Other current liabilities		10,880			11,089
Total current liabilities		69,854			83,922
Debt		1,061,378			1,064,262
Other noncurrent liabilities of consolidated variable interest entities		7,479			8,080
Other noncurrent liabilities		18,524			20,689
Total liabilities		1,157,235			1,176,953
Commitments and contingencies
Stockholders' deficit:
Preferred stock - $0.01 par value, 200,000 shares authorized; none issued and outstanding at each of March 31, 2014 and December 31, 2013		-			-
Class A Common stock - $0.01 par value, 100,000,000 shares authorized; 30,622,035 and 30,598,535 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively		306			306
Class B Common stock - $0.01 par value, 20,000,000 shares authorized; none issued and outstanding at each of March 31, 2014 and December 31, 2013		-			-
Class C Common stock - $0.01 par value, 5,000,000 shares authorized; none issued and outstanding at each of March 31, 2014 and December 31, 2013		-			-
Additional paid-in capital		394,253			396,817
Accumulated deficit		(403,001	)		(410,354	)
Total stockholders' deficit		(8,442	)		(13,231	)
Total liabilities and stockholders' deficit	$	1,148,793		$	1,163,722

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

NEXSTAR BROADCASTING GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share information, unaudited)

	Three Months Ended March 31,
	2014			2013

Net revenue	$	133,833		$	112,205
Operating expenses:
Direct operating expenses, excluding depreciation and amortization		41,849			34,104
Selling, general, and administrative expenses, excluding depreciation and amortization		41,040			35,500
Amortization of broadcast rights		8,632			8,813
Amortization of intangible assets		6,193			7,990
Depreciation		8,419			7,980
Total operating expenses		106,133			94,387
Income from operations		27,700			17,818
Interest expense, net		(15,170	)		(16,549	)
Other expenses		(128	)		(84	)
Income before income taxes		12,402			1,185
Income tax expense		(5,049	)		(480	)
Net income	$	7,353		$	705
Net income per common share:
Basic	$	0.24		$	0.02
Diluted	$	0.23		$	0.02
Weighted average number of common shares outstanding:
Basic		30,603			29,461
Diluted		31,909			31,054

Dividends declared per common share	$	0.15		$	0.12

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

NEXSTAR BROADCASTING GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Three Months Ended March 31, 2014
(in thousands, except share information, unaudited)


				Common Stock									Additional				Total
	Preferred Stock			Class A			Class B			Class C			Paid-In		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Capital		Deficit		Deficit
Balances as of December 31, 2013	-	$	-	30,598,535	$	306	-	$	-	-	$	-	$	396,817	$	(410,354)	$	(13,231)
Stock-based compensation expense	-		-	-		-	-		-	-		-		1,643		-		1,643
Exercise of stock options	-		-	23,500		-	-		-	-		-		107		-		107
Excess tax benefit from stock option exercises	-		-	-		-	-		-	-		-		274		-		274
Common stock dividends declared	-		-	-		-	-		-	-		-		(4,588)		-		(4,588)
Net income	-		-	-		-	-		-	-		-		-		7,353		7,353
Balances as of March 31, 2014	-	$	-	30,622,035	$	306	-	$	-	-	$	-	$	394,253	$	(403,001)	$	(8,442)

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

NEXSTAR BROADCASTING GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

	Three Months Ended March 31,
	2014			2013
Cash flows from operating activities:
Net income	$	7,353		$	705
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for bad debts		1,015			397
Amortization of broadcast rights, excluding barter		2,960			2,969
Depreciation of property and equipment		8,419			7,980
Amortization of intangible assets		6,193			7,990
(Gain) loss on asset disposal, net		(15	)		7
Amortization of debt financing costs		647			506
Amortization of debt discount		43			325
Stock-based compensation expense		1,643			495
Deferred income taxes		4,496			295
Payments for broadcast rights		(3,149	)		(3,700	)
Deferred gain recognition		(109	)		(109	)
Amortization of deferred representation fee incentive		(205	)		(205	)
Excess tax benefit from stock option exercises		(274	)		(1,189	)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		3,958			(18,214	)
Prepaid expenses and other current assets		1,184			670
Other noncurrent assets		92			(5	)
Accounts payable and accrued expenses		343			(224	)
Interest payable		8,932			12,256
Deferred revenue		492			92
Other liabilities of consolidated variable interest entities		735			595
Other noncurrent liabilities		(22	)		1,469
Net cash provided by operating activities		44,731			13,105
Cash flows from investing activities:
Purchases of property and equipment		(3,983	)		(6,786	)
Payments for acquisitions		(22,057	)		(121,114	)
Proceeds from disposals of property and equipment		14			6
Net cash used in investing activities		(26,026	)		(127,894	)
Cash flows from financing activities:
Repayments of long-term debt		(3,610	)		-
Payments for debt financing costs		(77	)		(690	)
Proceeds from long-term debt		-			70,000
Proceeds from exercise of stock options		107			1,455
Excess tax benefit from stock option exercises		274			1,189
Common stock dividends paid		(4,588	)		(3,529	)
Payments for capital lease obligations		(259	)		(10	)
Net cash (used in) provided by financing activities		(8,153	)		68,415
Net increase (decrease) in cash and cash equivalents		10,552			(46,374	)
Cash and cash equivalents at beginning of period		40,028			68,999
Cash and cash equivalents at end of period	$	50,580		$	22,625
Supplemental information:
Interest paid	$	5,547		$	3,370
Income taxes paid, net	$	47		$	899
Non-cash investing and financing activities:
Accrued purchases of property and equipment	$	966		$	1,659
Noncash purchases of property and equipment	$	14		$	2,555
Accrued debt financing costs	$	-		$	552

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

NEXSTAR BROADCASTING GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	Organization and Business Operations

As of March 31, 2014, Nexstar Broadcasting Group, Inc. and its wholly-owned subsidiaries (“Nexstar”) owned, operated, programmed or provided sales and other services to 74 television stations and 19 digital multicast channels, including those owned by Mission Broadcasting, Inc. (“Mission”), in 44 markets in the states of Illinois, Indiana, Maryland, Missouri, Montana, Tennessee, Texas, Pennsylvania, Louisiana, Arkansas, Alabama, New York, Florida, Wisconsin, Michigan, Utah, Vermont, California and Iowa. The stations are affiliates of ABC (19 stations), NBC (16 stations), FOX (13 stations), CBS (13 stations), The CW (6 stations and 2 digital multicast channels), MyNetworkTV (5 stations and 2 digital multicast channels), Telemundo (one station and one digital multicast channel), Bounce TV (9 digital multicast channels), Me-TV (2 digital multicast channels), LiveWell (2 digital multicast channels), LATV (one digital multicast channel) and one independent station. Through various local service agreements, Nexstar provided sales, programming and other services to 21 stations and 5 digital multicast channels owned and/or operated by independent third parties. Nexstar operates in one reportable television broadcasting segment. The economic characteristics, services, production process, customer type and distribution methods for Nexstar’s operations are substantially similar and are therefore aggregated as a single reportable segment.

2.	Summary of Significant Accounting Policies

Principles of Consolidation

The Condensed Consolidated Financial Statements include the accounts of Nexstar. Also included in the Condensed Consolidated Financial Statements are the accounts of independently-owned variable interest entities (“VIEs”), including Mission. Nexstar and the consolidated VIEs are collectively referred to as the “Company”. Where the assets of the consolidated VIEs are not available to be used to settle the obligations of Nexstar, they are presented separately as assets of the consolidated VIEs on the Condensed Consolidated Balance Sheets. Similarly, where the creditors of the consolidated VIEs do not have recourse to the general credit of Nexstar, the related liabilities are presented separately as liabilities of the consolidated VIEs on the Condensed Consolidated Balance Sheets. Nexstar management evaluates each arrangement that may include variable interests and determines the need to consolidate an entity where it determines Nexstar is the primary beneficiary of a VIE in accordance with related authoritative literature and interpretive guidance. Certain stations owned by Citadel Communications, L.P. and its related entities (“Citadel”) were considered VIEs as of December 31, 2013. Nexstar completed the acquisition of these stations from Citadel during the first quarter of 2014 and are no longer VIEs as of March 31, 2014.

All intercompany account balances and transactions have been eliminated in consolidation.

Liquidity

Nexstar is highly leveraged, which makes it vulnerable to changes in general economic conditions. Nexstar’s ability to repay or refinance its debt will depend on, among other things, financial, business, market, competitive and other conditions, many of which are beyond Nexstar’s control.

Interim Financial Statements

The Condensed Consolidated Financial Statements as of March 31, 2014 and for the three months ended March 31, 2014 and 2013 are unaudited. However, in the opinion of management, such financial statements include all adjustments (consisting solely of normal recurring adjustments) necessary for the fair statement of the financial information included herein in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Results of operations for interim periods are not necessarily indicative of results for the full year. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related Notes included in Nexstar’s Annual Report on Form 10-K for the year ended December 31, 2013. The balance sheet as of December 31, 2013 has been derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

Mission

Mission is included in these Consolidated Financial Statements because Nexstar is deemed under U.S. GAAP to have a controlling financial interest in Mission as a VIE for financial reporting purposes as a result of (1) local service agreements Nexstar has with the Mission stations, (2) Nexstar’s guarantee of the obligations incurred under Mission’s senior secured credit facility (see Note 6), (3) Nexstar having power over significant activities affecting Mission’s economic performance, including budgeting for advertising revenue, advertising sales and hiring and firing of sales force personnel and (4) purchase options granted by Mission which permit Nexstar to acquire the assets and assume the liabilities of each Mission station, subject to Federal Communications Commission (“FCC”) consent. The purchase options are freely exercisable or assignable by Nexstar without consent or approval by Mission for consideration equal to the greater of (1) seven times the station’s cash flow, as defined in the option agreement, less the amount of its indebtedness, as defined in the option agreement, or (2) the amount of its indebtedness. Additionally, Nexstar has an option to purchase any or all of Mission’s stock, subject to FCC consent, for a price equal to the pro rata portion of the greater of (1) five times the stations’ cash flow, as defined in the agreement, reduced by the amount of indebtedness, as defined in the agreement, or (2) $100,000. These option agreements (which expire on various dates between 2014 and 2023) are freely exercisable or assignable by Nexstar without consent or approval by Mission or its shareholders. The Company expects these option agreements to be renewed upon expiration. As of March 31, 2014, the assets of Mission consisted of current assets of $15.0 million (excluding broadcast rights and amounts due from Nexstar), broadcast rights of $2.2 million, FCC licenses of $41.6 million, goodwill of $32.5 million, other intangible assets of $23.3 million, property and equipment of $26.1 million, noncurrent deferred tax assets of $23.8 million and other noncurrent assets of $3.9 million. Substantially all of Mission’s assets, except for its FCC licenses, collateralize its secured debt obligation. See Note 9 for a presentation of condensed consolidating financial information of the Company, which includes the accounts of Mission.

Nexstar has entered into local service agreements with Mission to provide sales and operating services to the Mission stations. The following table summarizes the various local service agreements Nexstar had in effect with Mission as of March 31, 2014:

Service Agreements			Mission Stations
TBA Only(1)			WFXP and KHMT
SSA & JSA(2)			KJTL, KJBO-LP, KLRT, KASN, KOLR, KCIT, KCPN-LP, KAMC, KRBC, KSAN, WUTR, WAWV, WYOU, KODE, WTVO, KTVE, WTVW and WVNY

___________________________________________

(1)	Nexstar has a time brokerage agreement (“TBA”) with each of these stations which allows Nexstar to program most of each station’s broadcast time, sell each station’s advertising time and retain the advertising revenue generated in exchange for monthly payments to Mission.
(2)	Nexstar has both a shared services agreement (“SSA”) and a joint sales agreement (“JSA”) with each of these stations. Each SSA allows the Nexstar station in the market to provide services including news production, technical maintenance and security, in exchange for Nexstar’s right to receive certain payments from Mission as described in the SSAs. Each JSA permits Nexstar to sell the station’s advertising time and retain a percentage of the net revenue from the station’s advertising time in return for monthly payments to Mission of the remaining percentage of net revenue as described in the JSAs.

Nexstar’s ability to receive cash from Mission is governed by these local service agreements. Under the local service agreements, Nexstar has received substantially all of Mission’s available cash, after satisfaction of operating costs and debt obligations. Nexstar anticipates it will continue to receive substantially all of Mission’s available cash, after satisfaction of operating costs and debt obligations. In compliance with FCC regulations for both Nexstar and Mission, Mission maintains complete responsibility for and control over programming, finances, personnel and operations of its stations.

Variable Interest Entities

Nexstar may determine that a station is a VIE as a result of local service agreements entered into with the owner-operator of the station. The term local service agreements generally refers to a contract between separately owned television stations serving the same market, whereby the owner-operator of one station contracts with the owner-operator of the other station to provide it with administrative, sales and other services required for the operation of its station. Nevertheless, the owner-operator of each station retains control and responsibility for the operation of its station, including ultimate responsibility over all programming broadcast on its station. In addition to those with Mission, Nexstar has VIEs in connection with local service agreements entered into with stations as discussed below.

Nexstar has determined that it has a variable interest in WYZZ, the FOX affiliate in Peoria, Illinois owned by Cunningham Broadcasting Corporation (“Cunningham”). Nexstar also has determined that it has a variable interest in WHP, the CBS affiliate in Harrisburg, Pennsylvania, which is owned by Sinclair Broadcast Group, Inc. (“Sinclair”), as a result of Nexstar becoming successor-in-interest to a TBA entered into by a former owner of WLYH. Nexstar has evaluated its arrangements with Cunningham and Sinclair and has determined that it is not the primary beneficiary of the variable interests because it does not have the ultimate power to direct the activities that most significantly impact the economic performance of the stations, including developing the annual operating budget, programming and oversight and control of sales management personnel. Therefore, Nexstar has not consolidated these stations under authoritative guidance related to the consolidation of variable interest entities. Under the outsourcing agreement with Cunningham, Nexstar pays for certain operating expenses of WYZZ, and therefore may have unlimited exposure to any potential operating losses. Nexstar’s management believes that Nexstar’s minimum exposure to loss under the Cunningham outsourcing agreement consists of the fees paid to Cunningham. Additionally, Nexstar indemnifies the owners of WHP and WYZZ from and against all liability and claims arising out of or resulting from its activities, acts or omissions in connection with the agreements. The maximum potential amount of future payments Nexstar could be required to make for such indemnification is undeterminable at this time. In 2013, WYZZ was owned by Sinclair, sold to Cunningham in November 2013, and Nexstar had another variable interest in WUHF in Rochester, New York, also owned by Sinclair, which terminated on December 31, 2013. Under the outsourcing agreements, Nexstar made payments to Cunningham of $0.3 million and to Sinclair of $1.2 million for the three months ended March 31, 2014 and 2013, respectively. Nexstar had a balance due to Cunningham and Sinclair for fees under these arrangements in the amount of $0.3 million and $1.8 million as of March 31, 2014 and December 31, 2013, respectively, and had receivables for advertising aired on these two stations in the amount of $1.1 million and $2.5 million, respectively.

Nexstar also determined that it had variable interests in the newly acquired stations from Citadel (See Note 3) as a result of TBAs effective September 16, 2013. Nexstar evaluated the business arrangements with these stations and determined that it was the primary beneficiary of the variable interests because it had the ultimate power to direct the activities that most significantly impact the economic performance of the stations including developing the annual operating budget, programming and oversight and control of sales management personnel. Therefore, Nexstar consolidated these stations as of September 16, 2013 under authoritative guidance related to the consolidation of variable interest entities. Nexstar completed its acquisition of the Citadel stations in March 2014. Thus, Nexstar no longer has variable interests in these stations. See Note 3 for additional information.

Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, broadcast rights payable, accounts payable and accrued expenses approximate fair value due to their short-term nature. See Note 6 for fair value disclosures related to the Company’s debt.

Income Per Share

Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed using the weighted-average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares are calculated using the treasury stock method. They consist of stock options outstanding during the period and reflect the potential dilution that could occur if common stock were issued upon exercise of stock options. The following table shows the amounts used in computing the Company’s diluted shares (in thousands):

	Three Months Ended March 31,
	2014		2013
Weighted average shares outstanding - basic		30,603		29,461
Effect of dilutive stock options		1,306		1,593
Weighted average shares outstanding - diluted		31,909		31,054

Stock options to purchase 621,000 shares of Class A common stock were excluded from the computation of diluted earnings per share for the three months ended March 31, 2014 because their impact would have been antidilutive. No stock options were excluded from the computation of dilutive earnings per share for the three months ended March 31, 2013.

Basis of Presentation

Certain prior year financial statement amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on net income or stockholders’ deficit as previously reported.

Recent Accounting Pronouncements

In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) (“ASU 2014-08”). ASU 2014-08 provides guidance that raises the threshold for disposals to qualify as a discontinued operation. ASU 2014-08 also allows companies to have significant continuing involvement and continuing cash flows with the discontinued operation and requires additional disclosures for discontinued operation and new disclosures for individually material disposal transactions that do not meet the definition of a discontinued operation. The update is effective for the years beginning after December 15, 2014. The Company does not expect the implementation of this standard to have a material impact on its financial position or results of operations.

3.	Acquisitions

Completed Acquisitions

Citadel

On September 16, 2013, Nexstar entered into definitive agreements with Citadel to acquire 3 television stations in 3 markets along with the respective network affiliation agreements: WOI (ABC) in the Des Moines, Iowa market, WHBF (CBS) in the Quad Cities, Iowa market and KCAU (ABC) in the Sioux City, Iowa market. Nexstar acquired the assets of KCAU and WHBF and the outstanding equity of WOI for a total of $87.9 million in cash. In 2013, Nexstar made payments of $44.9 million to acquire the assets excluding FCC licenses and real property interests of KCAU and WHBF and $21.0 million as an upfront payment to acquire the outstanding equity of WOI, funded by a combination of borrowings under Nexstar’s revolving credit facility and cash on hand. Nexstar also entered into TBAs with these stations, effective September 16, 2013, to provide programming and sales services to these stations during the pendency of the FCC approval of the acquisitions. On March 5, 2014, Nexstar received approval from the FCC to purchase the remaining assets of KCAU and WHBF and to acquire the outstanding equity of WOI. On March 13, 2014, Nexstar completed the acquisition of FCC licenses and real property interests of KCAU and WHBF and the outstanding equity of WOI and paid the remaining purchase price of $22.0 million, funded by cash on hand. In addition, Nexstar finalized the fair values of the assets acquired and recorded a decrease in goodwill of $19 thousand. The TBAs entered into with KCAU, WHBF and WOI were also terminated as of this date. The acquisitions allow Nexstar entrance into 3 new markets. During the three months ended March 31, 2014, transaction costs relating to these acquisitions, including legal and professional fees of $0.1 million, were expensed as incurred.

The fair values of the assets acquired and liabilities assumed in the acquisition are as follows (in thousands):

Broadcast rights	$	269
Prepaid expenses and other current assets		305
Property and equipment		10,613
FCC licenses		24,700
Network affiliation agreements		26,129
Other intangible assets		3,398
Goodwill		30,195
Other assets		1,807
Total assets acquired		97,416
Less: Broadcast rights payable		(269	)
Less: Accounts payable and accrued expenses		(397	)
Less: Deferred tax liabilities		(8,801	)
Net assets acquired	$	87,949

The fair value assigned to goodwill is attributable to future expense reductions utilizing management’s leverage in programming and other station operating costs. The intangible assets related to the network affiliation agreements are amortized over 15 years. Other intangible assets are amortized over an estimated weighted average useful life of one year.

Nexstar expects the amortization of the acquired KCAU and WHBF goodwill and FCC licenses of $10.7 million and $14.7 million, respectively, to be deductible for tax purposes. The acquired WOI goodwill, FCC license and network affiliation agreements of $19.5 million, $10.0 million and $11.0 million, respectively, will not be deductible for tax purposes until such time that the station is disposed.

Net revenue of $5.7 million and net income of $0.1 million during the three months ended March 31, 2014 of the acquired stations have been included in the accompanying Condensed Consolidated Statements of Operations.

Internet Broadcasting Systems

Effective April 1, 2014, Nexstar acquired the assets of Internet Broadcasting Systems, Inc. (“IBS”) for $20.0 million, subject to adjustment for working capital. Refer to Note 10 for additional information.

Signed Purchase Agreements

CCA/White Knight

On April 24, 2013, Nexstar and Mission entered into a stock purchase agreement to acquire the stock of privately-held Communications Corporation of America (“CCA”) and White Knight Broadcasting (“White Knight”), the owners of 19 television stations in 10 markets, for a total consideration of $270.0 million, subject to adjustments for working capital. Pursuant to the stock purchase agreement, Nexstar has agreed to purchase all the outstanding equity of CCA and Mission has agreed to purchase all the outstanding equity of White Knight. Nexstar will acquire 10 television stations, Mission will acquire 7 television stations and Rocky Creek Communications, Inc. (“Rocky Creek”), an independent third party, will acquire 2 television stations. Nexstar will also enter into local service agreements with Mission and Rocky Creek. These acquisitions will allow the Company entrance into 7 new markets and create duopolies in 4 markets. The stations to be acquired are as follows:

Market	Market Rank	Station	Affiliation
Nexstar:
Harlingen-Weslaco-Brownsville-McAllen, TX	86	KVEO	NBC/Estrella
Waco-Temple-Bryan, TX	88	KWKT KYLE	FOX/MyNetworkTV/ Estrella FOX/MyNetworkTV/ Estrella
El Paso, TX	91	KTSM	NBC/Estrella
Baton Rouge, LA	94	WGMB WBRL-CD	FOX The CW
Tyler-Longview, TX	107	KETK	NBC/Estrella
Lafayette, LA	124	KADN KLAF-LD	FOX MyNetworkTV
Alexandria, LA	179	WNTZ	FOX/MyNetworkTV

Mission:

Shreveport, LA	83	KMSS	FOX
Baton Rouge, LA	94	WVLA KZUP-CD	NBC RTV
Tyler-Longview, TX	107	KFXK KFXL-LD KLPN-LD	FOX FOX MyNetworkTV
Odessa-Midland, TX	152	KPEJ	FOX/Estrella

Rocky Creek:

Shreveport, LA		83		KSHV		MyNetworkTV
Evansville, IN		104		WEVV		CBS/FOX/ MyNetworkTV

A deposit of $27.0 million was paid in April 2013 upon signing the agreement, funded by a combination of borrowings under Nexstar’s revolving credit facility and cash on hand. The remaining purchase price is expected to be funded through cash generated from operations prior to closing, borrowings under Nexstar and Mission’s existing credit facilities and future credit transactions. The acquisitions are subject to FCC approval, Department of Justice (“DOJ”) approval and other customary conditions and the Company is projecting them to close in 2014. No significant transaction costs were incurred in connection with this acquisition during the three months ended March 31, 2014.

Stainless

On September 13, 2013, Mission entered into a definitive agreement to acquire WICZ, the FOX affiliate, and WBPN-LP, the MyNetworkTV affiliate, both in the Binghamton, New York market, from Stainless Broadcasting, L.P. (“Stainless”). The acquisition will allow Mission entrance into this market. Under the terms of the purchase agreement, Mission will acquire the assets of WICZ and WBPN-LP for $15.3 million in cash, subject to adjustments for working capital. A deposit of $0.2 million was paid in September 2013 upon signing the agreement. The remaining purchase price is expected to be funded by Mission through borrowings under its existing credit facility and cash on hand. The acquisition is subject to FCC approval and other customary conditions and Mission projects it to close 2014. During the three months ended March 31, 2014, transactions costs relating to this acquisition, including legal fees of $0.2 million, were expensed as incurred.

Grant

On November 6, 2013, Nexstar entered into a stock purchase agreement to acquire the outstanding equity of privately-held Grant Company, Inc. (“Grant”), the owner of 7 television stations in 4 markets, for $87.5 million in cash, subject to adjustments for working capital. The stations to be acquired, along with their respective network affiliation agreements, are WFXR (FOX) and WWCW (The CW), both in the Roanoke, Virginia market, WZDX (FOX), in the Huntsville, Alabama market, KGCW (The CW) and KLJB (FOX), both in the Quad Cities, Iowa market and WLAX (FOX) and WEUX (FOX), both in the LaCrosse, Wisconsin market. Simultaneous with this acquisition, Nexstar entered into a purchase agreement with Mission pursuant to which Mission will acquire KLJB from Nexstar for $15.3 million in cash and, upon consummation, enter into local service agreements with Nexstar. The acquisitions will allow the Company entrance into 3 new markets and a duopoly in one market. A deposit of $8.5 million was paid by Nexstar in November 2013 upon signing the stock purchase agreement, funded by cash on hand. The remaining purchase price is expected to be funded through cash generated from operations prior to closing, borrowings under the existing credit facilities and future credit transactions. The acquisitions are subject to FCC approval and other customary conditions and the Company is projecting them to close in 2014. No significant transaction costs were incurred in connection with this acquisition during the three months ended March 31, 2014.

Gray TV/Excalibur

On December 18, 2013, Nexstar and Mission entered into definitive agreements to acquire 6 television stations in 2 markets. Under the terms of the purchase agreements, Nexstar will acquire the outstanding equity of the following stations from Gray Television Group, Inc. (“Gray TV”) for $33.5 million in cash, subject to adjustments for working capital, along with their respective network affiliation agreements: WMBB (ABC) in the Panama City, Florida market, KREX (CBS) and KGJT (MyNetworkTV), both in the Grand Junction, Colorado market, KREG (CBS), in the Glenwood Springs, Colorado market and KREY (CBS), in the Montrose, Colorado market. Both KREG and KREY operate as satellite stations of KREX. Mission will acquire the outstanding equity of KFQX, the FOX affiliate, in the Grand Junction, Colorado market, for $4.0 million in cash, subject to adjustments for working capital, from Excalibur Broadcasting, LLC (“Excalibur”). The acquisitions will allow the Company entrance into 2 new markets. Nexstar expects to fund the purchase price of stations to be acquired from Gray TV through cash generated from operations prior to closing, borrowings under Nexstar’s existing credit facility and future credit transactions. Mission expects to fund the purchase price of stations to be acquired from Excalibur through cash generated from operations prior to closing. The acquisitions are subject to FCC approval and other customary conditions and the Company is projecting them to close in 2014. No significant transaction costs were incurred in connection with these acquisitions during the three months ended March 31, 2014.

4.	Intangible Assets and Goodwill

Intangible assets subject to amortization consisted of the following (in thousands):

	Estimated		March 31, 2014										December 31, 2013
	useful life,					Accumulated										Accumulated
	in years		Gross			Amortization				Net			Gross			Amortization				Net
Network affiliation agreements		15		$	441,811		$	(296,291	)		$	145,520		$	441,811		$	(291,154	)		$	150,657
Other definite-lived intangible assets		1-15			33,435			(22,613	)			10,822			33,435			(21,557	)			11,878
Other intangible assets				$	475,246		$	(318,904	)		$	156,342		$	475,246		$	(312,711	)		$	162,535

The following table presents the Company’s estimate of amortization expense for the remainder of 2014, each of the five succeeding years ended December 31 and thereafter for definite-lived intangible assets as of March 31, 2014 (in thousands):

Remainder of 2014	$	16,193
2015		20,053
2016		15,261
2017		14,557
2018		12,231
2019		10,760
Thereafter		67,287
	$	156,342

The amounts recorded to goodwill and FCC licenses were as follows (in thousands):

	Goodwill												FCC Licenses
					Accumulated											Accumulated
	Gross				Impairment				Net				Gross			Impairment				Net
Balance as of December 31, 2013		$	244,043			$	(45,991	)		$	198,052			$	338,441		$	(49,421	)		$	289,020
Citadel acquisitions (See Note 3)			(19	)			-				(19	)			-			-				-
Balance as of March 31, 2014		$	244,024			$	(45,991	)		$	198,033			$	338,441		$	(49,421	)		$	289,020

Indefinite-lived intangible assets are not subject to amortization, but are tested for impairment annually or whenever events or changes in circumstances indicate that such assets might be impaired. As of March 31, 2014, the Company did not identify any events that would trigger impairment assessment.

5.	Accrued Expenses

Accrued expenses consisted of the following (in thousands):

	March 31,		December 31,
	2014		2013
Compensation and related taxes	$	5,053	$	9,744
Sales commissions		2,607		2,556
Employee benefits		1,680		1,354
Property taxes		895		649
Other		9,884		9,839
	$	20,119	$	24,142

Debt

Long-term debt consisted of the following (in thousands):

	March 31,			December 31,
	2014			2013
Term loans, net of discount of $1,491 and $1,554, respectively	$	541,903		$	545,450
6.875% Senior unsecured notes due 2020, including premium of $649 and $669, respectively		525,649			525,669
		1,067,552			1,071,119
Less: current portion		(6,174	)		(6,857	)
	$	1,061,378		$	1,064,262

2014 Transactions

In March 2014, Nexstar and Mission paid the contractual maturities under their senior secured credit facilities of $0.5 million and $0.5 million, respectively.

On March 10, 2014, pursuant to the mandatory prepayment provisions under their credit agreements, Nexstar and Mission prepaid $1.1 million and $1.0 million, respectively, of the outstanding principal balance under their Term Loan B-2. In addition, Nexstar prepaid $0.5 million of the outstanding principal balance under its Term Loan A. The mandatory prepayments were calculated per the credit agreements, based on the consolidated first lien indebtedness ratio, as defined in the credit agreements, less amounts declined by lenders.

Unused Commitments and Borrowing Availability

Nexstar and Mission had $105.0 million of total unused revolving loan commitments under their senior secured credit facilities, all of which was available for borrowing, based on the covenant calculations as of March 31, 2014. Nexstar and Mission also had $184.0 million of unused Term Loan A Facilities commitment under their amended senior secured credit facilities, all of which was available for borrowing as of March 31, 2014, upon the close of the CCA and White Knight acquisitions. Nexstar and Mission’s ability to access funds under their senior secured credit facilities depends, in part, on their compliance with certain financial covenants.

Debt Covenants

The Nexstar senior secured credit facility agreement contains covenants which require Nexstar to comply with certain financial covenant ratios, including (1) a maximum consolidated total net leverage ratio of Nexstar Broadcasting, Inc. (“Nexstar Broadcasting”) a wholly-owned, indirect subsidiary of Nexstar, and Mission of 7.25 to 1.00 at March 31, 2014, (2) a maximum consolidated first lien net leverage ratio of 4.0 to 1.00 at any time and (3) a minimum consolidated fixed charge coverage ratio of 1.20 to 1.00 at any time. The covenants, which are formally calculated on a quarterly basis, are based on the combined results of Nexstar Broadcasting and Mission. Mission’s senior secured credit agreement does not contain financial covenant ratio requirements, but includes default provisions in the event Nexstar does not comply with all covenants contained in its senior secured credit facility agreement. As of March 31, 2014, Nexstar was in compliance with all of its covenants.

Collateralization and Guarantees of Debt

Nexstar and Mission’s senior secured credit facilities are collateralized by a security interest in substantially all the combined assets, excluding FCC licenses, of Nexstar and Mission. Nexstar guarantees full payment of all obligations incurred under the Mission senior secured credit facility in the event of Mission’s default. Similarly, Mission is a guarantor of the Nexstar senior secured credit facility and the senior unsecured notes issued by Nexstar.

Fair Value of Debt

The aggregate carrying amounts and estimated fair values of the Company’s debt were as follows (in thousands):

	March 31, 2014						December 31, 2013
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Term loans(1)		$	541,903		$	544,170		$	545,450		$	546,818
6.875% Senior unsecured notes(2)			525,649			563,719			525,669			561,750

_________________________

(1)

The fair value of senior secured credit facilities is computed based on borrowing rates currently available to Nexstar and Mission for bank loans with similar terms and average maturities. These fair value measurements are considered Level 3, as significant inputs to the fair value calculation are unobservable in the market.

(2)

The fair value of Nexstar’s fixed rate debt is estimated based on bid prices obtained from an investment banking firm that regularly makes a market for these financial instruments. These fair value measurements are considered Level 2, as quoted market prices are available for low volume trading of these securities.

7.	FCC Regulatory Matters

Television broadcasting is subject to the jurisdiction of the FCC under the Communications Act of 1934, as amended (the “Communications Act”). The Communications Act prohibits the operation of television broadcasting stations except under a license issued by the FCC, and empowers the FCC, among other things, to issue, revoke, and modify broadcasting licenses, determine the location of television stations, regulate the equipment used by television stations, adopt regulations to carry out the provisions of the Communications Act and impose penalties for the violation of such regulations. The FCC’s ongoing rule making proceedings could have a significant future impact on the television industry and on the operation of the Company’s stations and the stations to which it provides services. In addition, the U.S. Congress may act to amend the Communications Act or adopt other legislation in a manner that could impact the Company’s stations, the stations to which it provides services and the television broadcast industry in general.

The FCC has adopted rules with respect to the final conversion of existing low power and television translator stations to digital operations. The FCC has established a September 1, 2015 deadline by which low power and television translator stations must cease analog operations. The Company will transition its low power and television translator stations to digital operations prior to September 1, 2015.

Media Ownership

The FCC is required to review its media ownership rules every four years and to eliminate those rules it finds no longer serve the “public interest, convenience and necessity.”

In 2006, the FCC initiated a rulemaking proceeding to review all of its media ownership rules, as required by the Communications Act. The FCC considered rules relating to ownership of two or more TV stations in a market, ownership of local TV and radio stations by daily newspapers in the same market, cross-ownership of local TV and radio stations, and changes to how the national TV ownership limits are calculated. In February 2008, the FCC adopted modest changes to its newspaper/broadcast cross-ownership rule while retaining the rest of its ownership rules then currently in effect. On July 7, 2011, the U.S. Court of Appeals for the Third Circuit vacated the FCC’s changes to its newspaper/broadcast cross-ownership rule while upholding the FCC’s retention of its other media ownership rules. In June 2012, the Supreme Court denied various petitions for Supreme Court review of the Third Circuit’s decision.

In May 2010, the FCC initiated its 2010 review of its media ownership rules with the issuance of a notice of inquiry, and in December 2011, the agency issued a notice of proposed rulemaking seeking comment on specific proposed changes to its ownership rules. The FCC, however, did not complete its 2010 review proceeding. In March 2014, the FCC initiated its 2014 quadrennial review with the adoption of a Further Notice of Proposed Rulemaking (FNPRM). The FNPRM incorporates the record of the 2010 quadrennial review proceeding and again solicits comment on proposed changes to the media ownership rules. Among the proposals in the FNPRM are (1) retention of the current local television ownership rule (but with modifications to certain service contour definitions to conform to digital television broadcasting), (2) elimination of the radio/television cross-ownership rule, (3) elimination of the newspaper/radio cross-ownership rule, and (4) retention of the newspaper/television cross-ownership rule, while considering waivers of that rule in certain circumstances. The FNPRM also proposes to define a category of sharing agreements designated as SSAs between television stations, and to require television stations to disclose those SSAs. Comments and reply comments on the FNPRM are expected to be filed in the third quarter of 2014.

Concurrently with its adoption of the FNPRM, the FCC also adopted a rule making television JSAs attributable to the seller of advertising time in certain circumstances. Under this rule, where a party owns a full-power television station in a market and sells more than 15% of the weekly advertising time for another, non-owned station in the same market under a JSA, that party will be deemed to have an attributable interest in the latter station for purposes of the local television ownership rule. Parties to newly attributable JSAs that do not comply with the local television ownership rule will have two years from the effective date of the rule to modify or terminate their JSAs to come into compliance. Although the FCC will consider waivers of the new JSA attribution rule, the FCC thus far has provided little guidance on what factors must be present for a waiver to be granted. If we are required to amend or terminate our existing agreements we could have a reduction in revenue and increased costs if we are unable to successfully implement alternative arrangements that are as beneficial as the existing JSA agreements.

Also in March 2014, the FCC’s Media Bureau issued a public notice announcing “processing guidelines” for certain pending and future applications for FCC approval of television acquisitions. The public notice indicates that the FCC will “closely scrutinize” applications which propose a JSA, SSA or local marketing agreement (“LMA”) between television stations, combined with an option, a similar “contingent interest,” or a loan guarantee.

In September 2013, the FCC commenced a rulemaking proceeding to consider whether to eliminate the “UHF discount” that is currently used to calculate compliance with the national television ownership limit.

Spectrum

The FCC has initiated various proceedings to assess the availability of spectrum to meet future wireless broadband needs. The FCC’s March 2010 “National Broadband Plan” recommends the reallocation of 120 megahertz of the spectrum currently used for broadcast television for wireless broadband use. The FCC has thus far adopted rules permitting television stations to share a single 6 megahertz channel and requested comment on proposals that include, among other things, whether to add new frequency allocations in the television bands for licensed fixed and mobile wireless uses and whether to implement technical rule modifications to improve the viability of certain channels that are underutilized by digital television stations. In February 2012, Congress adopted legislation authorizing the FCC to conduct an incentive auction whereby television broadcasters could voluntarily relinquish all or part of their spectrum in exchange for consideration. On September 28, 2012, the FCC adopted a Notice of Proposed Rule Making seeking public comment on the design of the incentive auction and various technical issues related to the reallocation of television spectrum for mobile broadband use. Comments on the notice were filed in January 2013, and reply comments were filed in March 2013. A reallocation of television spectrum for wireless broadband use would involve a “repacking” of the television broadcast band, which would require some television stations to change channel or otherwise modify their technical facilities. Future steps to reallocate television spectrum to broadband use may be to the detriment of the Company’s investment in digital facilities, could require substantial additional investment to continue current operations, and may require viewers to invest in additional equipment or subscription services to continue receiving broadcast television signals. The Company cannot predict the timing or results of television spectrum reallocation efforts or their impact to its business.

Retransmission Consent

On March 3, 2011, the FCC initiated a Notice of Proposed Rulemaking to reexamine its rules (i) governing the requirements for good faith negotiations between multichannel video program distributors (MVPDs) and broadcasters, including implementing a prohibition on one station negotiating retransmission consent terms for another station under a local service agreement; (ii) for providing advance notice to consumers in the event of dispute; and (iii) to extend certain cable-only obligations to all MVPDs. The FCC also asked for comment on eliminating the network non-duplication and syndicated exclusivity protection rules, which may permit MVPDs to import out-of-market television stations during a retransmission consent dispute. In March 2014, the FCC adopted a rule that prohibits joint retransmission consent negotiation between television stations in the same market which are not commonly owned and which are ranked among the top four stations in the market in terms of audience share. Concurrently with its adoption of this rule, the FCC also adopted a further notice of proposed rulemaking which seeks comment on the elimination or modification of the network non-duplication and syndicated exclusivity rules. The FCC’s prohibition on joint negotiations and its possible elimination or modification of the network non-duplication and syndicated exclusivity protection rules are likely to affect the Company’s ability to sustain its current level of retransmission consent revenues or grow such revenues in the future and could have an adverse effect on the Company’s business, financial condition and results of operations. The Company cannot predict the resolution of the FCC’s network non-duplication and syndicated exclusivity proposals, or the impact of these proposals or the FCC’s new prohibition on joint negotiations, on its business.

8.	Commitments and Contingencies

Guarantee of Mission Debt

Nexstar guarantees full payment of all obligations incurred under Mission’s senior secured credit facility. In the event that Mission is unable to repay amounts due, Nexstar will be obligated to repay such amounts. The maximum potential amount of future payments that Nexstar would be required to make under this guarantee would be generally limited to the amount of borrowings outstanding. As of March 31, 2014, Mission had a maximum commitment of $351.4 million under its senior secured credit facility, of which $231.4 million of debt was outstanding.

Indemnification Obligations

In connection with certain agreements into which the Company enters in the normal course of its business, including local service agreements, business acquisitions and borrowing arrangements, the Company enters into contractual arrangements under which the Company agrees to indemnify the other party to such arrangement from losses, claims and damages incurred by the indemnified party for certain events as defined within the particular contract. Such indemnification obligations may not be subject to maximum loss clauses and the maximum potential amount of future payments the Company could be required to make under these indemnification arrangements may be unlimited. Historically, payments made related to these indemnifications have been immaterial and the Company has not incurred significant costs to defend lawsuits or settle claims related to these indemnification agreements.

Litigations

From time to time, the Company is involved with claims that arise out of the normal course of its business. In the opinion of management, any resulting liability with respect to these claims would not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

9.	Condensed Consolidating Financial Information

The following condensed consolidating financial information presents the financial position, results of operations and cash flows of Nexstar and its consolidated VIE. This information is presented in lieu of separate financial statements and other related disclosures pursuant to Regulation S-X Rule 3-10 of the Securities Exchange Act of 1934, as amended, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.”

The Nexstar column presents the parent company’s financial information (not including any subsidiaries). Nexstar owns 100% of Nexstar Finance Holdings, Inc. (“Nexstar Holdings”), which owns 100% of Nexstar Broadcasting. The Nexstar Holdings column presents its financial information (not including any subsidiaries). The Nexstar Broadcasting column presents its financial information. The Mission column presents the financial information of Mission, an entity which Nexstar Broadcasting is required to consolidate as a VIE (see Note 2). Neither Mission nor Nexstar Broadcasting has any subsidiaries.

Nexstar’s outstanding 6.875% senior unsecured notes (See Note 6) are fully and unconditionally guaranteed, jointly and severally, by Nexstar and Mission, subject to certain customary release provisions. These notes are not guaranteed by any other entities.

CONDENSED CONSOLIDATING BALANCE SHEET
As of March 31, 2014
(in thousands)

				Nexstar					Nexstar					Consolidated
	Nexstar			Broadcasting		Mission			Holdings		Eliminations			Company
ASSETS
Current assets:
Cash and cash equivalents	$	-		$	50,013	$	567		$	-	$	-		$	50,580
Due from Nexstar Broadcasting		-			-		4,356			-		(4,356	)		-
Other current assets		-			138,358		15,591			-		-			153,949
Total current assets		-			188,371		20,514			-		(4,356	)		204,529
Investments in subsidiaries eliminated upon consolidation		65,149			-		-			80,391		(145,540	)		-
Amounts due from parents eliminated upon consolidation		-			17,545		-			-		(17,545	)		-
Property and equipment, net		-			179,366		26,111			-		-			205,477
Goodwill		-			165,544		32,489			-		-			198,033
FCC licenses		-			247,457		41,563			-		-			289,020
Other intangible assets, net		-			133,077		23,265			-		-			156,342
Other noncurrent assets		-			66,655		28,737			-		-			95,392
Total assets	$	65,149		$	998,015	$	172,679		$	80,391	$	(167,441	)	$	1,148,793
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of debt	$	-		$	4,337	$	1,837		$	-	$	-		$	6,174
Due to Mission		-			4,356		-			-		(4,356	)		-
Other current liabilities		-			58,218		5,462			-		-			63,680
Total current liabilities		-			66,911		7,299			-		(4,356	)		69,854
Debt		-			832,188		229,190			-		-			1,061,378
Amounts due to subsidiary eliminated upon consolidation		2,305			-		-			15,240		(17,545	)		-
Other noncurrent liabilities		(3	)		18,525		7,479			2		-			26,003
Total liabilities		2,302			917,624		243,968			15,242		(21,901	)		1,157,235
Stockholders' equity (deficit):
Common stock		306			-		-			-		-			306
Other stockholders' equity (deficit)		62,541			80,391		(71,289	)		65,149		(145,540	)		(8,748	)
Total stockholders' equity (deficit)		62,847			80,391		(71,289	)		65,149		(145,540	)		(8,442	)
Total liabilities and stockholders' equity (deficit)	$	65,149		$	998,015	$	172,679		$	80,391	$	(167,441	)	$	1,148,793

CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2013
(in thousands)

				Nexstar					Nexstar					Consolidated
	Nexstar			Broadcasting		Mission			Holdings		Eliminations			Company
ASSETS
Current assets:
Cash and cash equivalents	$	-		$	36,312	$	3,716		$	-	$	-		$	40,028
Due from Mission		-			3,847		-			-		(3,847	)		-
Other current assets		-			146,298		14,840			-		-			161,138
Total current assets		-			186,457		18,556			-		(3,847	)		201,166
Investments in subsidiaries eliminated upon consolidation		61,100			-		-			76,342		(137,442	)		-
Amounts due from subsidiary eliminated upon consolidation		259			-		-			-		(259	)		-
Amounts due from parents eliminated upon consolidation		-			14,981		-			-		(14,981	)		-
Property and equipment, net		-			185,499		26,760			-		-			212,259
Goodwill		-			165,563		32,489			-		-			198,052
FCC licenses		-			247,457		41,563			-		-			289,020
Other intangible assets, net		-			138,497		24,038			-		-			162,535
Other noncurrent assets		-			69,347		31,343			-		-			100,690
Total assets	$	61,359		$	1,007,801	$	174,749		$	76,342	$	(156,529	)	$	1,163,722
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of debt	$	-		$	4,523	$	2,334		$	-	$	-		$	6,857
Due to Nexstar Broadcasting		-			-		3,847			-		(3,847	)		-
Other current liabilities		-			72,115		4,950			-		-			77,065
Total current liabilities		-			76,638		11,131			-		(3,847	)		83,922
Debt		-			834,131		230,131			-		-			1,064,262
Amounts due to subsidiary eliminated upon consolidation		-			-		-			15,240		(15,240	)		-
Other noncurrent liabilities		(3	)		20,690		8,080			2		-			28,769
Total liabilities		(3	)		931,459		249,342			15,242		(19,087	)		1,176,953
Stockholders' equity (deficit):
Common stock		306			-		-			-		-			306
Other stockholders' equity (deficit)		61,056			76,342		(74,593	)		61,100		(137,442	)		(13,537	)
Total stockholders' equity (deficit)		61,362			76,342		(74,593	)		61,100		(137,442	)		(13,231	)
Total liabilities and
stockholders' equity (deficit)	$	61,359		$	1,007,801	$	174,749		$	76,342	$	(156,529	)	$	1,163,722

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended March 31, 2014
(in thousands)

			Nexstar						Nexstar					Consolidated
	Nexstar		Broadcasting			Mission			Holdings		Eliminations			Company
Net broadcast revenue (including trade and barter)	$	-	$	124,953		$	8,880		$	-	$	-		$	133,833
Revenue between consolidated entities		-		2,445			9,648			-		(12,093	)		-
Net revenue		-		127,398			18,528			-		(12,093	)		133,833
Operating expenses:
Direct operating expenses, excluding depreciation and amortization		-		37,483			4,366			-		-			41,849
Selling, general, and administrative expenses, excluding depreciation and amortization		-		40,217			823			-		-			41,040
Local service agreement fees between consolidated entities		-		9,648			2,445			-		(12,093	)		-
Amortization of broadcast rights		-		7,142			1,490			-		-			8,632
Amortization of intangible assets		-		5,420			773			-		-			6,193
Depreciation		-		7,686			733			-		-			8,419
Total operating expenses		-		107,596			10,630			-		(12,093	)		106,133
Income from operations		-		19,802			7,898			-		-			27,700
Interest expense, net		-		(12,677	)		(2,493	)		-		-			(15,170	)
Other expenses		-		(128	)		-			-		-			(128	)
Equity in income of subsidiaries		4,049		-			-			4,049		(8,098	)		-
Income before income taxes		4,049		6,997			5,405			4,049		(8,098	)		12,402
Income tax expense		-		(2,948	)		(2,101	)		-		-			(5,049	)
Net income	$	4,049	$	4,049		$	3,304		$	4,049	$	(8,098	)	$	7,353

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended March 31, 2013
(in thousands)

			Nexstar						Nexstar					Consolidated
	Nexstar		Broadcasting			Mission			Holdings		Eliminations			Company
Net broadcast revenue (including trade and barter)	$	-	$	105,110		$	7,095		$	-	$	-		$	112,205
Revenue between consolidated entities		-		2,405			9,262			-		(11,667	)		-
Net revenue		-		107,515			16,357			-		(11,667	)		112,205
Operating expenses:
Direct operating expenses, excluding depreciation and amortization		-		30,756			3,348			-		-			34,104
Selling, general, and administrative expenses, excluding depreciation and amortization		-		34,703			797			-		-			35,500
Local service agreement fees between consolidated entities		-		9,262			2,405			-		(11,667	)		-
Amortization of broadcast rights		-		7,214			1,599			-		-			8,813
Amortization of intangible assets		-		5,924			2,066			-		-			7,990
Depreciation		-		7,012			968			-		-			7,980
Total operating expenses		-		94,871			11,183			-		(11,667	)		94,387
Income from operations		-		12,644			5,174			-		-			17,818
Interest expense, net		-		(12,072	)		(4,477	)		-		-			(16,549	)
Other expense		-		(84	)		-			-		-			(84	)
Equity in income of subsidiaries		282		-			-			282		(564	)		-
Income before income taxes		282		488			697			282		(564	)		1,185
Income tax expense		-		(206	)		(274	)		-		-			(480	)
Net income	$	282	$	282		$	423		$	282	$	(564	)	$	705

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2014
(in thousands)

				Nexstar						Nexstar				Consolidated
	Nexstar			Broadcasting			Mission			Holdings		Eliminations		Company
Cash flows from operating activities	$	-		$	46,269		$	(1,538	)	$	-	$	-	$	44,731

Cash flows from investing activities:
Purchases of property and equipment		-			(3,899	)		(84	)		-		-		(3,983	)
Deposits and payments for acquisitions		-			(22,057	)		-			-		-		(22,057	)
Other investing activities		-			14			-			-		-		14
Net cash used in investing activities		-			(25,942	)		(84	)		-		-		(26,026	)

Cash flows from financing activities:
Repayments of long-term debt		-			(2,155	)		(1,455	)		-		-		(3,610	)
Common stock dividends paid		(4,588	)		-			-			-		-		(4,588	)
Inter-company payments		4,481			(4,481	)		-			-		-		-
Other financing activities		107			10			(72	)		-		-		45
Net cash used in financing activities		-			(6,626	)		(1,527	)		-		-		(8,153	)
Net increase (decrease) in cash and cash equivalents		-			13,701			(3,149	)		-		-		10,552
Cash and cash equivalents at beginning of period		-			36,312			3,716			-		-		40,028
Cash and cash equivalents at end of period	$	-		$	50,013		$