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EX-31.1 - DENNIS THATCHER CERTIFICATION 31.1 - MISSION BROADCASTING INCexh31_1.htm
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EXCEL - IDEA: XBRL DOCUMENT - MISSION BROADCASTING INCFinancial_Report.xls

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: 333-62916-02
 
MISSION BROADCASTING, INC.
(Exact Name of Registrant as Specified in Its Charter)
   
Delaware
51-0388022
(State of Organization or Incorporation)
(IRS Employer Identification No.)
   
30400 Detroit Road, Suite 304, Westlake, Ohio
44145
(Address of Principal Executive Offices)
(Zip Code)
 
(440) 526-2227
(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 checkmark 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
¨
Accelerated filer
¨
       
Non-accelerated filer
x  
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 14, 2014, the Registrant had 1,000 shares of common stock outstanding, held by two shareholders.
 

 
 

 

TABLE OF CONTENTS
 
         
     
Page
 
PART I
FINANCIAL INFORMATION
     
         
ITEM 1.
Financial Statements (Unaudited)
     
         
 
Condensed Balance Sheets as of March 31, 2014 and December 31, 2013
    1  
           
 
Condensed Statements of Operations for the three months ended March 31, 2014 and 2013
    2  
           
 
Condensed Statements of Cash Flows for the three months ended March 31, 2014 and 2013
    3  
           
 
Notes to Condensed Financial Statements
    4  
           
ITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
    13  
           
ITEM 3.
Quantitative and Qualitative Disclosures about Market Risk
    20  
           
ITEM 4.
Controls and Procedures
    20  
           
PART II
OTHER INFORMATION
       
           
ITEM 1.
Legal Proceedings
    21  
           
ITEM 1A.
Risk Factors
    21  
           
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
    23  
           
ITEM 3.
Defaults Upon Senior Securities
    23  
           
ITEM 4.
Mine Safety Disclosures
    23  
           
ITEM 5.
Other Information
    23  
           
ITEM 6.
Exhibits
    24  
         
         
 

 
 

 
PART I. FINANCIAL INFORMATION

 
ITEM 1.  Financial Statements

MISSION BROADCASTING, INC.
 
CONDENSED BALANCE SHEETS
 
(in thousands, except share information, unaudited)
 
   
March 31,
   
December 31,
 
 
 
2014
   
2013
 
ASSETS
 
 
       
Current assets:
 
 
       
Cash and cash equivalents
  $ 567     $ 3,716  
Accounts receivable, net of allowance for doubtful accounts of $115 and $96, respectively
    6,178       5,059  
Due from Nexstar Broadcasting, Inc.
    4,356       -  
Deferred tax assets, net
    8,160       8,160  
Prepaid expenses and other current assets
    1,253       1,621  
Total current assets
    20,514       18,556  
Property and equipment, net
    26,111       26,760  
Goodwill
    32,489       32,489  
FCC licenses
    41,563       41,563  
Other intangible assets, net
    23,265       24,038  
Deferred tax assets, net
    23,764       25,727  
Other noncurrent assets, net
    4,973       5,616  
Total assets
  $ 172,679     $ 174,749  
LIABILITIES AND SHAREHOLDERS' DEFICIT
               
Current liabilities:
               
Current portion of debt
  $ 1,837     $ 2,334  
Current portion of broadcast rights payable
    1,134       1,454  
Due to Nexstar Broadcasting, Inc.
    -       3,847  
Accounts payable
    856       723  
Accrued expenses
    3,000       2,372  
Other current liabilities
    472       401  
Total current liabilities
    7,299       11,131  
Debt
    229,190       230,131  
Other liabilities
    7,479       8,080  
Total liabilities
    243,968       249,342  
Commitments and contingencies
               
Shareholders' deficit:
               
Common stock - $1 par value, 1,000 shares authorized, issued and outstanding as of each of March 31, 2014 and December 31, 2013
    1       1  
Subscription receivable
    (1 )     (1 )
Accumulated deficit
    (71,289 )     (74,593 )
Total shareholders' deficit
    (71,289 )     (74,593 )
Total liabilities and shareholders' deficit
  $ 172,679     $ 174,749  

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

 

 
1

 

MISSION BROADCASTING, INC.
 
CONDENSED STATEMENTS OF OPERATIONS
 
(in thousands, unaudited)
 
             
   
Three Months Ended
 
   
March 31,
 
   
2014
   
2013
 
             
Net broadcast revenue
  $ 8,880     $ 7,095  
Revenue from Nexstar Broadcasting, Inc.
    9,648       9,262  
Net revenue
    18,528       16,357  
Operating expenses:
               
Direct operating expenses, excluding depreciation and amortization
    4,366       3,348  
Selling, general, and administrative expenses, excluding depreciation and amortization
    823       797  
Fees incurred pursuant to local service agreements with Nexstar Broadcasting, Inc.
    2,445       2,405  
Amortization of broadcast rights
    1,490       1,599  
Amortization of intangible assets
    773       2,066  
Depreciation
    733       968  
Total operating expenses
    10,630       11,183  
Income from operations
    7,898       5,174  
Interest expense, net
    (2,493 )     (4,477 )
Income before income taxes
    5,405       697  
Income tax expense
    (2,101 )     (274 )
Net income
  $ 3,304     $ 423  

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

 

 
2

 

MISSION BROADCASTING, INC.
 
CONDENSED STATEMENTS OF CASH FLOWS
 
(in thousands, unaudited)
 
             
   
Three Months Ended
 
   
March 31,
 
   
2014
   
2013
 
Cash flows from operating activities:
           
Net income
  $ 3,304     $ 423  
Adjustments to reconcile net income to net cash used in operating activities:
               
Deferred income taxes
    1,963       243  
Provision for bad debts
    19       11  
Depreciation of property and equipment
    733       968  
Amortization of intangible assets
    773       2,066  
Amortization of debt financing costs
    146       126  
Amortization of broadcast rights, excluding barter
    439       485  
Payments for broadcast rights
    (435 )     (627 )
Deferred gain recognition
    (49 )     (50 )
Amortization of debt discount
    17       128  
Changes in operating assets and liabilities, net of acquisitions:
               
Accounts receivable
    (1,138 )     (1,336 )
Prepaid expenses and other current assets
    103       97  
Other noncurrent assets
    (15 )     (42 )
Taxes payable
    141       27  
Accounts payable and accrued expenses
    694       921  
Interest payable
    (2 )     2,825  
Deferred revenue
    (20 )     (28 )
Other noncurrent liabilities
    (8 )     (214 )
Due to/due from Nexstar Broadcasting, Inc.
    (8,203 )     (8,464 )
Net cash used in operating activities
    (1,538 )     (2,441 )
Cash flows from investing activities:
               
Purchases of property and equipment
    (84 )     (20 )
Payments for acquisitions
    -       (59,338 )
Net cash used in investing activities
    (84 )     (59,358 )
Cash flows from financing activities:
               
Proceeds from issuance of long-term debt
    -       65,000  
Repayments of long-term debt
    (1,455 )     -  
Payments for debt financing costs
    (72 )     (2,850 )
Net cash (used in) provided by financing activities
    (1,527 )     62,150  
Net (decrease) increase in cash and cash equivalents
    (3,149 )     351  
Cash and cash equivalents at beginning of period
    3,716       318  
Cash and cash equivalents at end of period
  $ 567     $ 669  
                 
Supplemental information:
               
Interest paid
  $ 2,332     $ 1,397  
Income taxes paid, net
  $ 4     $ 5  
Non-cash investing activities:
               
Accrued purchases of property and equipment
  $ -     $ 2  

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

 

 
3

 

MISSION BROADCASTING, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1.
Organization and Business Operations

As of March 31, 2014, Mission Broadcasting, Inc. (“Mission” or the “Company”) owned and operated 20 television stations and 4 digital multicast channels, affiliated with the NBC, ABC, FOX, CBS, MyNetworkTV, The CW or Bounce TV television networks, in markets located in New York, Pennsylvania, Illinois, Indiana, Missouri, Louisiana, Texas, Vermont, Arkansas and Montana. The Company operates in one reportable television broadcasting segment. Through local service agreements, Nexstar Broadcasting, Inc. (“Nexstar”) provides sales and operating services to all of the Mission television stations (see Note 4).
 
The Company is highly leveraged, which makes it vulnerable to changes in general economic conditions. The Company’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 its control, as well as Nexstar maintaining its pledge to continue the local service agreements with the Company’s stations. Management believes that with Nexstar’s pledge to continue the local service agreements as described in a letter of support dated February 26, 2014, the Company’s available cash, anticipated cash flow from operations and available borrowings under its senior secured credit facility should be sufficient to fund working capital, capital expenditure requirements, interest payments and scheduled debt principal payments for at least the next twelve months from March 31, 2014, enabling Mission to continue to operate as a going concern.

Nexstar’s senior secured credit facility agreement contains covenants which require Nexstar to comply with certain financial ratios, including (a) a maximum consolidated total net leverage ratio, (b) a maximum consolidated first lien net leverage ratio, and (c) a minimum consolidated fixed charge coverage ratio. The covenants, which are calculated on a quarterly basis, include the combined results of Nexstar and Mission. The Company’s senior secured credit facility agreement does not contain financial covenant ratio requirements; however, it does include default provisions in the event Nexstar does not comply with all covenants contained in its credit agreement. As of March 31, 2014, Nexstar has informed Mission that it was in compliance with all covenants contained in its credit agreement and the indentures governing the publicly-held notes.

2.
Summary of Significant Accounting Policies
 
Interim Financial Statements
 
The Condensed 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 (“SEC”). The preparation of the Condensed 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 Financial Statements should be read in conjunction with the Financial Statements and related Notes included in the Company’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.

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.

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 shareholders’ deficit as previously reported.


 
4

 


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

Signed Purchase Agreements

CCA/White Knight

On April 24, 2013, the Company and Nexstar 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 to be acquired. Pursuant to the stock purchase agreement, Mission agreed to purchase all the outstanding equity of White Knight and Nexstar has agreed to purchase all the outstanding equity of CCA. Mission will acquire 7 television stations and will enter into local service agreements with Nexstar. Nexstar will acquire 10 television stations and Rocky Creek Communications, Inc. (“Rocky Creek”), an independent third party, will acquire 2 television stations. These acquisitions will allow the Company entrance into three new markets. The Company and Nexstar expect to finance the purchase price through cash on hand, cash generated from operations prior to closing, borrowings under their existing credit facilities and future credit transactions. The acquisitions are subject to FCC approval, Department of Justice approval and other customary conditions and the Company, Nexstar and Rocky Creek project them to close in 2014.

Stainless

On September 13, 2013, the Company 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”). This acquisition will allow the Company entrance into this market. Under the terms of the purchase agreement, the Company will acquire the assets of WICZ and WBPN-LP for $15.3 million in cash, subject to adjustments for working capital to be acquired. A deposit of $0.2 million was paid upon signing the agreement. The remaining purchase price is expected to be funded through borrowings under the Company’s existing credit facility and cash on hand. The acquisition is subject to FCC approval and other customary conditions and Mission projects it to close in 2014. No significant transaction costs were incurred in connection with this acquisition during the three months ended March 31, 2014.

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. Simultaneous with this agreement, Nexstar entered into a purchase agreement with Mission pursuant to which Mission will acquire one of Grant’s stations, KLJB, the FOX affiliate, in the Quad Cities, Iowa market, from Nexstar for $15.3 million in cash, subject to adjustments for working capital. Upon consummation of the acquisition, the Company will also enter into local service agreements with Nexstar. The purchase price is expected to be funded by Mission through cash generated from operations prior to closing. The acquisition is subject to FCC approval and other customary conditions and the Company is projecting it to close in 2014.

Excalibur

On December 18, 2013, the Company entered into a definitive agreement to 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 acquisition will allow the Company entrance into this market. The purchase price is expected to be funded through cash generated from operations prior to closing. The acquisition is subject to FCC approval and other customary conditions and the Company projects it to close in 2014.


 
5

 


4.
Local Service Agreements with Nexstar

The Company has entered into local service agreements with Nexstar to provide sales and operating services to all of its stations. For the stations with a shared services agreement (“SSA”), the Nexstar station in the market provides certain services including news production, technical maintenance and security, in exchange for monthly payments to Nexstar. For each station with which the Company has entered into an SSA, it has also entered into a joint sales agreement (“JSA”), whereby Nexstar sells the advertising time of the station and retains a percentage of the net revenue it generates in return for monthly payments to Mission of the remaining percentage of net revenue. For the stations with a time brokerage agreement (“TBA”), Nexstar programs most of the station’s broadcast time, sells the station’s advertising time and retains the advertising revenue it generates in exchange for monthly payments to Mission, based on the station’s monthly operating expenses. JSA and TBA fees generated from Nexstar under the agreements are reported as “Revenue from Nexstar Broadcasting, Inc.,” and SSA fees incurred by Mission under the agreements are reported as “Fees incurred pursuant to local service agreements with Nexstar Broadcasting, Inc.” in the accompanying condensed statements of operations.

Under these agreements, Mission is responsible for certain operating expenses of its stations and therefore may have unlimited exposure to any potential operating losses. Mission will continue to operate its stations under the SSAs and JSAs or TBAs until the termination of such agreements. The SSAs and JSAs generally have a term of eight to ten years. Nexstar indemnifies Mission from Nexstar’s activities pursuant to the local service agreements to which Nexstar is a party.


 
6

 


Under the local service agreements, Nexstar receives substantially all of the Company’s available cash, after satisfaction of operating costs and debt obligations. The Company anticipates that Nexstar will continue to receive substantially all of its available cash, after satisfaction of operating costs and debt obligations. In compliance with FCC regulations for both the Company and Nexstar, Mission maintains complete responsibility for and control over programming, finances, personnel and operations of its stations. Mission had the following local service agreements in effect with Nexstar as of March 31, 2014:

Station
 
Market
 
Type of Agreement
 
Expiration
 
Consideration from Nexstar
WFXP
 
Erie, PA
 
TBA
 
8/16/16
 
Monthly payments received from Nexstar
KHMT
 
Billings, MT
 
TBA
 
12/13/17
 
Monthly payments received from Nexstar
KJTL/KJBO-LP
 
 
Wichita Falls, TX-Lawton, OK
 
 
SSA
JSA
 
5/31/19
5/31/19
 
$60 thousand per month paid to Nexstar
70% of net revenue received from Nexstar
WYOU
 
 
Wilkes Barre-Scranton, PA
 
 
SSA
JSA
 
1/4/18
9/30/14
 
$35 thousand per month paid to Nexstar
70% of net revenue received from Nexstar
KODE
 
 
Joplin, MO-Pittsburg, KS
 
 
SSA
JSA
 
3/31/22
9/30/14
 
$75 thousand per month paid to Nexstar
70% of net revenue received from Nexstar
KRBC
 
 
Abilene-Sweetwater, TX
 
 
SSA
JSA
 
6/12/23
6/30/23
 
$25 thousand per month paid to Nexstar
70% of net revenue received from Nexstar
KSAN
 
 
San Angelo, TX
 
 
SSA
JSA
 
5/31/14
5/31/14
 
$10 thousand per month paid to Nexstar
70% of net revenue received from Nexstar
WAWV
 
 
Terre Haute, IN
 
 
SSA
JSA
 
5/8/23
5/8/23
 
$10 thousand per month paid to Nexstar
70% of net revenue received from Nexstar
KCIT/KCPN-LP
 
 
Amarillo, TX
 
 
SSA
JSA
 
4/30/19
4/30/19
 
$50 thousand per month paid to Nexstar
70% of net revenue received from Nexstar
KAMC
 
 
Lubbock, TX
 
 
SSA
JSA
 
2/15/19
2/15/19
 
$75 thousand per month paid to Nexstar
70% of net revenue received from Nexstar
KOLR
 
 
Springfield, MO
 
 
SSA
JSA
 
2/15/19
2/15/19
 
$150 thousand per month paid to Nexstar
70% of net revenue received from Nexstar
WUTR
 
 
Utica, NY
 
 
SSA
JSA
 
3/31/24
3/31/24
 
$10 thousand per month paid to Nexstar
70% of net revenue received from Nexstar
WTVO
 
 
Rockford, IL
 
 
SSA
JSA
 
10/31/14
10/31/14
 
$75 thousand per month paid to Nexstar
70% of net revenue received from Nexstar
KTVE
 
 
Monroe, LA-El Dorado, AR
 
 
SSA
JSA
 
1/16/18
1/16/18
 
$20 thousand per month paid to Nexstar
70% of net revenue received from Nexstar
WTVW
 
 
Evansville, IN
 
 
SSA
JSA
 
11/30/19
11/30/19
 
$50 thousand per month paid to Nexstar
70% of net revenue received from Nexstar
KLRT/KASN
 
 
Little Rock-Pine Bluff, AR
 
 
SSA
JSA
 
1/1/21
1/1/21
 
$150 thousand per month paid to Nexstar
70% of net revenue received from Nexstar
WVNY
 
 
Burlington-Plattsburgh, VT
 
 
SSA
JSA
 
3/1/21
3/1/21
 
$20 thousand per month paid to Nexstar
70% of net revenue received from Nexstar
               
 
 

 
7

 

 
5.
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     $ 84,505     $ (62,463 )   $ 22,042     $ 84,505     $ (61,716 )   $ 22,789  
Other definite-lived intangible assets
    1-15       15,661       (14,438 )     1,223       15,661       (14,412 )     1,249  
Other intangible assets
          $ 100,166     $ (76,901 )   $ 23,265     $ 100,166     $ (76,128 )   $ 24,038  

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
 
$
2,095 
 
2015
   
2,579 
 
2016
   
2,579 
 
2017
   
2,456 
 
2018
   
2,164 
 
2019
   
1,954 
 
Thereafter
   
9,438 
 
   
$
23,265 
 

The carrying amounts of 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
  $ 34,039     $ (1,550 )   $ 32,489     $ 52,260     $ (10,697 )   $ 41,563  
Balance as of March 31, 2014
    34,039       (1,550 )     32,489       52,260       (10,697 )     41,563  

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 an impairment assessment.

 
8

 


6.
Debt
 
Long-term debt consisted of the following (in thousands):

 
March 31,
 
December 31,
 
 
2014
 
2013
 
Term loans, net of discount of $414 and $431, respectively
  $ 231,027     $ 232,465  
Less: current portion
    (1,837 )     (2,334 )
    $ 229,190     $ 230,131  

2014 Transactions

In March 2014, the Company repaid the contractual maturity under its senior secured credit facility of $0.5 million.

On March 10, 2014, pursuant to the mandatory prepayment provisions under the Company’s credit agreement, the Company prepaid $1.0 million of the outstanding principal balance under its Term Loan B-2. The mandatory prepayment was calculated per the credit agreement, based on the Company’s and Nexstar’s consolidated first lien net leverage ratio, as defined in Nexstar’s credit agreement.

Unused Commitments and Borrowing Availability
 
As of March 31, 2014, the Company had $30.0 million unused revolving loan commitment under its senior secured credit facility, all of which was available for borrowing, based on the covenant calculations. In addition, the Company may receive reallocation from Nexstar’s unused revolving loan commitment of up to $75.0 million pursuant to the terms of the Company’s and Nexstar’s credit agreements. The Company also had $90.0 million of unused Term Loan A Facility commitment under its amended senior secured credit facility, all of which was available for borrowing as of March 31, 2014.

Collateralization and Guarantees of Debt
 
Nexstar Broadcasting Group, Inc. (Nexstar’s ultimate parent) and its subsidiaries guarantees full payment of all obligations under the Mission senior secured credit facility in the event of its default. Similarly, Mission is a guarantor of Nexstar’s senior secured credit facility, the $250.0 million 6.875% senior unsecured notes issued by Nexstar on November 9, 2012 and the additional $275.0 million 6.875% Notes issued by Nexstar on October 1, 2013 (the “6.875% Notes”). The senior secured credit facilities are collateralized by a security interest in substantially all the combined assets, excluding FCC licenses, of Nexstar and Mission.

Debt Covenants
 
The Mission senior secured credit facility 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 credit agreement. Nexstar has informed the Company that it was in compliance with its debt covenants as of March 31, 2014.
 
Fair Value of Debt
 
The aggregate carrying amounts and estimated fair value of Mission’s debt were as follows (in thousands):

   
March 31, 2014
   
December 31, 2013
 
   
Carrying
   
Fair
   
Carrying
   
Fair
 
   
Amount
   
Value
   
Amount
   
Value
 
Term loans
  $ 231,027     $ 231,829     $ 232,465     $ 233,299  

The fair value of the term loans is computed based on borrowing rates currently available to 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.


 
9

 


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. 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 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 formally 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.
 
 
 
10

 

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
 
Guarantees of Nexstar Debt
 
Mission is a guarantor of and has pledged substantially all its assets, excluding FCC licenses, to guarantee Nexstar’s credit facility. Mission is also a guarantor of Nexstar’s 6.875% Notes. The 6.875% Notes are general senior unsecured obligations subordinated to all of Mission’s senior debt. In the event that Nexstar is unable to repay amounts due under these debt obligations, Mission will be obligated to repay such amounts. The maximum potential amount of future payments that Mission would be required to make under these guarantees would be generally limited to the amount of borrowings outstanding under Nexstar’s senior secured credit facility and 6.875% Notes. As of March 31, 2014, Nexstar had $525.0 million outstanding obligations under its 6.875% Notes due on November 15, 2020 and had a maximum commitment of $481.0 million under its senior secured credit facility, of which $262.5 million in Term Loan B-2 and $49.5 million in Term Loan A were outstanding. Effective April 30, 2014, Nexstar amended its credit agreement. The amendment, among other things, reduced Nexstar’s commitment under its Term Loan A Facility from $144.0 million to $112.2 million.

Nexstar’s Term Loan B-2 is payable in consecutive quarterly installments of 0.25% of the aggregate principal, adjusted for any prepayments, with the remainder due in full at maturity on October 1, 2020. Nexstar’s Term Loan A is payable in quarterly installments that increase over time from 5.0% to 10.0% of the aggregate principal, adjusted for any prepayments, beginning December 31, 2014. The remainder of the principal is due at maturity on June 28, 2018.
 
 
11

 

 
Purchase Options Granted to Nexstar
 
    In consideration of the guarantee of Mission’s bank credit facility by Nexstar Broadcasting Group, Inc. and its subsidiaries, Mission has granted Nexstar purchase options to acquire the assets and assume the liabilities of each Mission station, subject to FCC consent, 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. Cash flow is defined as income or loss from operations, plus depreciation and amortization (including amortization of broadcast rights), interest income, non-cash trade and barter expenses, nonrecurring expenses (including time brokerage agreement fees), network compensation payments received or receivable and corporate management fees, less payments for broadcast rights, non-cash trade and barter revenue and network compensation revenue. Additionally, Mission’s shareholders granted Nexstar an option to purchase any or all of the Company’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.

Indemnification Obligations
 
In connection with certain agreements that the Company enters into 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 insignificant and the Company has not incurred significant costs to defend lawsuits or settle claims related to these indemnification agreements.
 
Litigation
 
From time to time, the Company is involved with claims that arise out of the normal course of 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 or results of operations.

9.
Subsequent events

    Effective April 30, 2014, Mission amended its credit agreement. The amendment reduced the Company’s commitment under its Term Loan A Facility to $60.0 million. Pursuant to the terms of the amended credit agreement, the Company may also reallocate its unused Term Loan A Facility to Nexstar. Additionally, the amended credit agreement increased the commitment fees on Mission’s unused Term Loan A Facility to 1.0%. As of this date, Mission had no borrowings under this facility.

 
12

 
 
ITEM 2.                      Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion and analysis should be read in conjunction with our Condensed Financial Statements and related Notes included elsewhere in this Quarterly Report on Form 10-Q and the Financial Statements and related Notes contained in our Annual Report on Form 10-K for the year ended December 31, 2013. Throughout this discussion, all references to “Mission”, “we”, “our”, “us” and the “Company” refer to Mission Broadcasting, Inc.

Overview of Operations
 
As of March 31, 2014, we owned and operated 20 television stations and 4 digital multicast channels. We have local service agreements with certain television stations owned by Nexstar, through which Nexstar provides various programming, sales or other services to our television stations. In compliance with FCC regulations for both Nexstar and us, we maintain complete responsibility for and control over programming, finances, personnel and operations for our stations.

The following table summarizes the various local service agreements our stations had in effect as of March 31, 2014 with Nexstar:
 
Service Agreements
 
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, KTVE, WTVO, WTVW and WVNY
______________________________
(1)
We have a time brokerage agreement (“TBA”) for 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 us.
(2)
We have both a shared services agreement (“SSA”) and a joint sales agreement (“JSA”) for each of these stations. The SSA allows the sharing of services including news production, technical maintenance and security, in exchange for Nexstar’s right to receive certain payments from us as described in the SSAs. The JSAs permit 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 us of the remaining percentage of the net revenue, as described in the JSAs.
 
    Under the local service agreements, Nexstar receives substantially all of our available cash, after satisfaction of operating costs and debt obligations. We anticipate that Nexstar will continue to receive substantially all of our available cash, after satisfaction of operating costs and debt obligations. For more information about our local service agreements with Nexstar, refer to Note 4 of our Condensed Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The operating revenue of our stations is derived primarily from broadcast advertising revenue sold and collected by Nexstar and paid to us under the JSAs. Broadcast advertising revenue is affected by a number of factors, including the economic conditions of the markets in which we operate, the demographic makeup of those markets and the marketing strategy employed in each market. Advertising revenue is positively affected by strong local economies, national and regional political election campaigns, and certain events such as the Olympic Games or the Super Bowl. Because television broadcast stations rely on advertising revenue, declines in advertising budgets, particularly in recessionary periods, adversely affect advertising revenues in the broadcast industry, and as a result may contribute to a decrease in the revenue of broadcast television stations. The stations’ advertising revenue is generally highest in the second and fourth quarters of each year, due in part to increases in consumer advertising in the spring and retail advertising in the period leading up to, and including, the holiday season. In addition, advertising revenue is generally higher during even-numbered years, when state, congressional and presidential elections occur and advertising airs during the Olympic Games. As 2014 is an election year and an Olympic year, we expect an increase in advertising revenue to be reported in 2014 compared to 2013.

Each station acquires licenses to broadcast programming in non-news and non-network time periods. The licenses are either purchased from a program distributor for cash or the program distributor is allowed to sell some of the advertising inventory as compensation to eliminate or reduce the cash cost for the license. The latter practice is referred to as barter broadcast rights. The station records the estimated fair market value of the licenses, including any advertising inventory given to the program distributor, as a broadcast right asset and liability. Barter broadcast rights are recorded at management’s estimate of the value of the advertising time exchanged using historical advertising rates, which approximates the fair value of the program material received. The assets are amortized as a component of amortization of broadcast rights. Amortization is computed using the straight-line method over the license period or period of usage, whichever ends earlier. The cash broadcast rights liabilities are reduced by monthly payments while the barter liability is amortized over the life of the contract as barter revenue.
 
Our primary operating expense consists of fixed monthly SSA fees paid to Nexstar for news production and technical and other services. To a lesser extent, our operating expenses include employee compensation and related benefits. A large percentage of the costs involved in the operation of our stations remains fixed.
 

 
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Industry Trends

As a television broadcaster, we are highly regulated and our operations require that we retain or renew a variety of government approvals and comply with changing federal regulations. On March 31, 2014, the FCC modified its television ownership rules such that a television licensee that sells more than 15 percent of the weekly advertising inventory of another television station in the same Designated Market Area will be deemed to have an attributable ownership interest in that station. Stations with existing JSAs that will be deemed attributable interests have two years from the effective date of the rules to amend or terminate those arrangements or to obtain waivers.  We will be required to amend or terminate our JSAs involving advertising sales in excess of 15 percent unless we are able to obtain a waiver of the rule. The Company expects to incur additional costs in complying with this new rule which is expected to be effective during the second quarter of 2014. We do not expect the new rules to impact our revenue from Nexstar in 2014; however, within the next two years our company may be negatively impacted by the new JSA attribution rule. If we are unable to obtain waivers from the FCC and 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 JSAs. Please refer to Item 1A Risk Factors section of this Quarterly Report on Form 10-Q for additional information.

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 FCC will “closely scrutinize” applications which propose a JSA, SSA or LMA between television stations, combined with an option, a similar “contingent interest,” or a loan guarantee. We have four announced acquisitions that are pending FCC approval that include “guideline” agreements. As a result of the recently adopted JSA rule and the processing guidelines the timing of ultimate approval for these transactions may be delayed in part because the new rule and guidelines may require amendments or waivers in order to obtain FCC approval. We plan to respond to regulatory inquires associated with each of the announced acquisitions and our intent is to close each of the transactions in 2014.

Also in March 2014, the FCC amended its rules governing retransmission consent negotiations. The amended rule effectively prohibits joint negotiation by two non-commonly owned stations ranked in the top four in viewership in a market to negotiate jointly with MVPDs. Historically, we have negotiated retransmission consent agreements jointly with Nexstar. Upon the effectiveness of this amendment, in most of our markets, we will effectively be required to separately negotiate our retransmission consent agreements with MVPDs. We cannot predict at this time the impact this amended rule will have on future negotiations with MVPDs and the impact, if any, it will have on our revenues and expenses.


 
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Historical Performance
 
Revenue
 
The following table sets forth the principal types of revenue earned by our stations (in thousands) and each type of revenue (other than barter revenue and revenue from Nexstar) as a percentage of total net broadcast revenue before barter:

   
Three Months Ended
March 31,
 
   
2014
   
2013
 
   
Amount
   
%
   
Amount
   
%
 
Retransmission compensation
  $ 7,701       98.4     $ 5,843       97.7  
Other
    128       1.6       138       2.3  
Net broadcast revenue before barter
    7,829       100.0       5,981       100.0  
Barter revenue
    1,051               1,114          
Revenue from Nexstar
    9,648               9,262          
Net revenue
  $ 18,528             $ 16,357          

Results of Operations
 
The following table sets forth a summary of our operations (in thousands) and the components of operating expense as a percentage of net revenue:

   
Three Months Ended
March 31,
 
   
2014
   
2013
 
   
Amount
   
%
   
Amount
   
%
 
Net revenue
  $ 18,528       100.0     $ 16,357       100.0  
Operating expenses:
                               
Corporate expenses
    322       1.8       282       1.7  
Station direct operating expenses, net of trade
    4,366       23.6       3,348       20.5  
Station selling, general and administrative expenses
    501       2.8       515       3.1  
Fees incurred pursuant to local service agreements with Nexstar
    2,445       13.2       2,405       14.7  
Barter expense
    1,051       5.7       1,114       6.8  
Depreciation
    733       4.0       968       5.9  
Amortization of intangible assets
    773       4.2       2,066       12.5  
Amortization of broadcast rights, excluding barter
    439       2.4       485       3.0  
Income from operations
  $ 7,898             $ 5,174          

 
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Three Months Ended March 31, 2014 Compared to Three Months Ended March 31, 2013
 
Revenue
 
Net revenue for the three months ended March 31, 2014 increased by $2.2 million, or 13.3%, from the same period in 2013. This increase was primarily attributed to compensation from retransmission and revenue from our newly acquired station, WVNY.

Revenue from Nexstar was $9.7 million for the three months ended March 31, 2014, compared to $9.3 million for the same period in 2013, an increase of $0.4 million, or 4.2%. The revenue we earn from Nexstar through our JSAs is directly correlated to the advertising revenue earned at our stations, which has increased primarily as a result of JSA we entered with Nexstar on March 1, 2013 for our newly acquired station, WVNY, and as 2014 is a political and an Olympic year.

Compensation from retransmission consent and network affiliation agreements was $7.7 million for the three months ended March 31, 2014, compared to $5.9 million for the same period in 2013, an increase of $1.8 million, or 31.2%. The increase was primarily due to retransmission consent providing for higher rates per subscriber during the quarter and incremental revenue from our newly acquired station, WVNY.
 
Operating Expenses
 
    Corporate expenses were consistent at $0.3 million for each of the three months ended March 31, 2014 and 2013. Corporate expense relates to costs associated with the centralized management of our stations.
 
    Station direct operating expenses, consisting primarily of news, engineering and programming, and station selling, general and administrative expenses were $4.9 million for the three months ended March 31, 2014, compared to $3.9 million for the same period in 2013, an increase of $1.0 million, or 26.0%. The increase was primarily due to programming costs of our newly acquired station of $0.3 million and an increase in programming costs of our legacy stations of $0.7 million related to recently enacted network agreements. Networks now require additional compensation from broadcasters for the use of network programming. Network program fees have recently increased industry wide and will continue to increase over the next several years.

Local service agreement fees associated with Nexstar relate to services provided by Nexstar in the production of newscasts, technical maintenance, promotional and administrative support under the SSAs. SSA fees were consistent at $2.4 million for each of the three months ended March 31, 2014 and 2013.
 
Depreciation of property and equipment was $0.8 million for the three months ended March 31, 2014, compared to $1.0 million for the same period in 2013, a decrease of $0.2 million, or 24.3%. This was primarily attributable to decreases in depreciation of property and equipment from certain of our legacy stations that reached full depreciation during the three months ended March 31, 2014.
 
    Amortization of intangible assets was $0.8 million for the three months ended March 31, 2014, compared to $2.1 million for the same period in 2013, a decrease of $1.3 million, or 62.6%. This was primarily attributable to decreases in amortization of other intangible assets from certain fully amortized assets.

Interest Expense
 
Interest expense, net was $2.5 million for the three months ended March 31, 2014, compared to $4.5 million for the same period in 2013, a decrease of $2.0 million, or 44.3%. The decrease was primarily attributable to lower interest rates on our outstanding debt as a result of refinancing our obligations under the $325.0 million 8.875% senior second lien notes into borrowings under our amended credit facility completed in October 2013. This decrease was partially offset by increased borrowings during 2013 to fund our acquisitions of television stations.

Income Taxes
 
    Income tax expense was $2.1 million for the three months ended March 31, 2014 and $0.3 million for the same period in 2013, or an increase of $1.8 million. The effective tax rate for the three months ended March 31, 2014 and 2013 were 38.9% and 39.4%, respectively.

 
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Liquidity and Capital Resources
 
We are highly leveraged, which makes us vulnerable to changes in general economic conditions. Our ability to meet the future cash requirements described below depends on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other conditions, many of which are beyond our control. Our ability to meet future cash requirements is also dependent upon the local service agreements we have entered into with Nexstar. Under our local service agreements, Nexstar sells our advertising time and pays us a percentage of the amount collected. The payments we receive from Nexstar are a significant component of our cash flows. On February 26, 2014, Nexstar represented to us that it will continue the various local service agreements under which it provides sales and other services to our television stations, thereby providing financial support to enable us to continue to operate as a going concern. We believe that with Nexstar’s pledge to continue the local service agreements, our available cash, anticipated cash flow from operations and available borrowings under our senior secured credit facility should be sufficient to fund working capital, capital expenditure requirements, interest payments and scheduled debt principal payments for at least the next twelve months from March 31, 2014. In order to meet future cash needs we may, from time to time, borrow under our existing senior secured credit facility. We will continue to evaluate the best use of our operating cash flow among capital expenditures, acquisitions and debt reduction.

Overview
 
The following tables present summarized financial information management believes is helpful in evaluating our liquidity and capital resources (in thousands):

   
Three Months Ended
 
   
March 31,
 
   
2014
   
2013
 
Net cash used in operating activities
  $ (1,538 )   $ (2,441 )
Net cash used in investing activities
    (84 )     (59,358 )
Net cash (used in) provided by financing activities
    (1,527 )     62,150  
Net (decrease) increase in cash and cash equivalents
  $ (3,149 )   $ 351  
Cash paid for interest
  $ 2,332     $ 1,397  
Cash paid for taxes
  $ 4     5  

   
As of
   
As of
 
 
March 31,
 
December 31,
 
 
2014
 
2013
 
Cash and cash equivalents
  $ 567     $ 3,716  
Long-term debt including current portion
    231,027       232,465  
Unused incremental term loan commitment under senior secured credit facility
    90,000       90,000  
Unused revolving loan commitment under senior secured credit facility
    30,000       30,000  

Cash Flows – Operating Activities
 
Net cash flows used in operating activities decreased by $0.9 million during the three months ended March 31, 2014 compared to the same period in 2013. This was primarily due to an increase in net revenue of $2.2 million less an increase in corporate expenses, station direct operating expenses, selling, general and administrative expenses and fees incurred pursuant to local service agreements with Nexstar of $1.1 million, a $0.7 million net source of cash from the timing of payments of broadcast rights, accounts receivable, accounts payable, accrued expenses, other noncurrent liabilities and amounts due to Nexstar. These were partially offset by an increase in cash paid for interest of $0.9 million.

Cash Flows – Investing Activities
 
Net cash flows used in investing activities decreased by $59.3 million during the three months ended March 31, 2014, compared to the same period in 2013. In 2013, we made payments of $53.7 million to acquire the assets of KLRT and KASN from Newport Television, LLC and $5.6 million to acquire the assets of WVNY from Smith Media, LLC.


 
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Cash Flows – Financing Activities
 
Net cash flows used in financing activities was $1.5 million during the three months ended March 31, 2014, compared to the net cash flows provided by financing activities of $62.2 for the same period in 2013. In 2014, we repaid a total of $1.5 million outstanding principal under our term loans. In 2013, we borrowed a total of $65.0 million in term loans and revolving loans under our senior secured credit facility to finance our acquisitions of KLRT, KASN and WVNY. This was partially offset by payment for debt financing costs of $2.9 million.

Our senior secured credit facility restricts but does not prohibit the payment of cash dividends to our shareholders.
 
Future Sources of Financing and Debt Service Requirements
 
As of March 31, 2014, we had a total debt of $231.0 million which represented 144.6% of our total capitalization. Our high level of debt requires that a substantial portion of cash flow be dedicated to pay principal and interest on our debt, which reduces the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes.
 
The total amount of borrowings available to us under the revolving loan commitment of our senior credit facility is based on covenant calculations contained in Nexstar’s credit agreement. As of March 31, 2014, we have $30.0 million unused revolving loan commitment under our senior secured credit facility. In addition, we may receive reallocation from Nexstar’s unused revolving loan commitment of up to $75.0 million pursuant to the terms of our and Nexstar’s credit agreements.

Effective April 30, 2014, we amended our credit agreement. The amendment reduced the commitment under our Term Loan A Facility to $60.0 million and increased the commitment fees on unused Term Loan A Facility to 1.0%. Our unused Term Loan A Facility of $60.0 million is expected to be utilized to fund our acquisition of stations from Communications Corporation of America and White Knight Broadcasting, which we project to close in 2014.

We also have signed agreements to acquire two stations from Stainless Broadcasting, L.P. (“Stainless”), one station from Nexstar and one station from Excalibur Broadcasting, LLC (“Excalibur”). We will fund the remaining $15.1 million to Stainless, $15.3 million to Nexstar and $4.0 million to Excalibur, subject to adjustments for working capital, through cash generated from operations prior to closing and borrowings under our existing credit facility, which we project to occur in 2014.

The following table summarizes the approximate aggregate amount of principal indebtedness scheduled to mature for the periods referenced as of March 31, 2014 (in thousands):

   
Total
   
Remainder of 2014
      2015-2016       2017-2018    
Thereafter
 
Senior secured credit facility
  $ 231,441     $ 1,378     $ 4,171     $ 4,670     $ 221,222  

Interest payments on our senior secured credit facility are generally paid every one to three months and are payable based on the type of interest rate selected.
 
The terms of our senior secured credit facility limit, but do not prohibit, us from incurring substantial amounts of additional debt in the future.

We do not have any rating downgrade triggers that would accelerate the maturity dates of our debt. However, a downgrade in our credit rating could adversely affect our ability to renew existing or obtain access to new credit facilities in the future and could increase the cost of such facilities.

Collateralization and Guarantees of Debt
 
Nexstar Broadcasting Group, Inc. (Nexstar’s ultimate parent) and its subsidiaries guarantee full payment of all obligations under our senior secured credit facility in the event of our default. Similarly, we are a guarantor of Nexstar’s senior secured credit facility and the 6.875% Senior unsecured notes (the “6.875% Notes”) issued by Nexstar. The senior secured credit facilities are collateralized by a security interest in substantially all the combined assets, excluding FCC licenses, of Nexstar and us. As of March 31, 2014, Nexstar had a maximum commitment of $481.0 million under its senior secured credit facility, of which $312.0 million of debt was outstanding and had $525.0 million of the 6.875% Notes outstanding.


 
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Debt Covenants
 
Our ability to continue as a going concern is dependent on Nexstar’s pledge to continue the local services agreements described in a letter of support dated February 26, 2014. Our senior secured credit facility agreement does not contain financial covenant ratio requirements; however, it does include an event of default if Nexstar does not comply with all covenants contained in its credit agreement. Nexstar’s senior secured credit facility agreement contains covenants which require Nexstar to comply with certain financial ratios, including (a) a maximum consolidated total net leverage ratio, (b) a maximum consolidated first lien net leverage ratio, and (c) a minimum consolidated fixed charge coverage ratio. The covenants, which are calculated on a quarterly basis, include the combined results of Nexstar and us. As of March 31, 2014, Nexstar has informed us that it was in compliance with all covenants contained in its credit agreement and the indentures governing the publicly-held notes. As of March 31, 2014, we were in compliance with all covenants related to the 8.875% Notes.

No Off-Balance Sheet Arrangements
 
As of March 31, 2014, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We are, therefore, not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.
 
Critical Accounting Policies and Estimates
 
Our Condensed Financial Statements have been prepared in accordance with U.S. GAAP, which requires us 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 Condensed Financial Statements and reported amounts of revenue and expenses during the period. On an ongoing basis, we evaluate our estimates, including those related to goodwill and intangible assets, bad debts, broadcast rights, trade and barter, income taxes, commitments and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates. Results of operations for interim periods are not necessarily indicative of results for the full year.
 
Information with respect to our critical accounting policies which we believe could have the most significant effect on our reported results and require subjective or complex judgments by management is contained in our Annual Report on Form 10-K for the year ended December 31, 2013. Management believes that as of March 31, 2014, there have been no material changes to this information.
 
Recent Accounting Pronouncements
 
Refer to Note 2 of our Condensed Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of our adoption of recently issued accounting pronouncements, including our expected date of adoption and effects on results of operations and financial position.
 

 
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Cautionary Note Regarding Forward-Looking Statements
 
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including: any projections or expectations of earnings, revenue, financial performance, liquidity and capital resources or other financial items; any assumptions or projections about the television broadcasting industry; any statements of our plans, strategies and objectives for our future operations, performance, liquidity and capital resources or other financial items; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and other similar words.
 
Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ from this projection or assumption in any of our forward-looking statements. Our future financial position and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties, including those described in our Annual Report on Form 10-K for the year ended December 31, 2013 and in our other filings with the Securities and Exchange Commission. The forward-looking statements made in this Quarterly Report on Form 10-Q are made only as of the date hereof, and we do not have or undertake any obligation to update any forward-looking statements to reflect subsequent events or circumstances unless otherwise required by law.

ITEM 3.
Quantitative and Qualitative Disclosures About Market Risk
 
Interest Rate Risk
 
Our exposure to market risk for changes in interest rates relates primarily to our long-term debt obligations.
 
Our term loan borrowings as of March 31, 2014 under our senior secured credit facility bear interest at a rate of 3.8%, which represented the base rate, or LIBOR, plus the applicable margin, as defined. Our revolving loans bear interest at LIBOR plus the applicable margin, which totaled 2.7% at March 31, 2014. Interest is payable in accordance with the credit agreement.
 
If LIBOR were to increase by 100 basis points, or one percentage point, from its March 31, 2014 level, our annual interest expense would increase and cash flow from operations would decrease by approximately $0.4 million, based on the outstanding balance of our credit facility as of March 31, 2014. Due to the LIBOR floor on our term loan, an increase of 50 basis points in LIBOR or any decrease in LIBOR would not have an impact on our operations or cash flows. As of March 31, 2014, we have no financial instruments in place to hedge against changes in the benchmark interest rates on our senior secured credit facility.
 
Impact of Inflation
 
We believe that our results of operations are not affected by moderate changes in the inflation rate.

ITEM 4.
Controls and Procedures
 
Evaluation of Disclosure Controls and Procedures
 
Mission’s management, with the participation of Mission’s President and Treasurer (who is Mission’s principal executive officer and principal financial and accounting officer), conducted an evaluation as of the end of the period covered by this report of the effectiveness of the design and operation of Mission’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934.
 
Based upon that evaluation, Mission’s President and Treasurer concluded that as of the end of the period covered by this report, Mission’s disclosure controls and procedures were effective in ensuring that information required to be disclosed by Mission in the reports it files or submits under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to Mission’s management, including its President and Treasurer, as appropriate to allow timely decisions regarding required disclosure.
 
Changes in Internal Control over Financial Reporting
 
As of the quarter ended March 31, 2014, there have been no changes in Mission’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
 

 
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PART II. OTHER INFORMATION

ITEM 1.                       Legal Proceedings
 
From time to time, we are involved in litigation that arises from the ordinary operations of business, such as contractual or employment disputes or other general actions. In the event of an adverse outcome of these proceedings, we believe the resulting liabilities would not have a material adverse effect on our financial condition or results of operations.
 
ITEM 1A.                       Risk Factors
 
There are no material changes from the risk factors previously disclosed in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2013, except the following risk factors are replaced in their entirety, due to recent changes in FCC rules:

The loss of or material reduction in retransmission consent revenues or further regulatory change in the current retransmission consent regulations could have an adverse effect on our business, financial condition, and results of operations.

The Company’s retransmission consent agreements with cable operators, DBS systems, and others (collectively “MVPDs”) permit these operators to retransmit our stations’ signals to their subscribers in exchange for the payment of compensation to us from the system operators as consideration. Our retransmission consent agreements expire at various times with a large number of agreements set to expire during 2014. If we are unable to renegotiate these agreements on favorable terms, or at all, the failure to do so could have an adverse effect on our business, financial condition, and results of operations.

The television networks have taken the position that they, as the owners or licensees of programming we broadcast and provide for retransmission, are entitled to a portion of the compensation we receive under the retransmission consent agreements and are including provisions for these payments to them in their network affiliation agreements. In addition, our affiliation agreements with some broadcast networks include certain terms that may affect our ability to allow MVPDs to retransmit network programming, and in some cases, we may lose the right to grant retransmission consent to such providers. Inclusion of these or similar provisions in our network affiliation agreements could materially reduce this revenue source and could have an adverse effect on our business, financial condition, and results of operations.

In addition, MVPDs are actively seeking to change the regulations under which retransmission consent is negotiated before both the U.S. Congress and the FCC in order to increase their bargaining leverage with television stations. On March 3, 2011, the FCC initiated a Notice of Proposed Rulemaking to reexamine its rules (1) governing the requirements for good faith negotiations between MVPDs and broadcasters, including implementing a prohibition on one station negotiating retransmission consent terms for another station under a local service agreement; (2) for providing advance notice to consumers in the event of dispute; and (3) 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.

On March 31, 2014, the FCC amended its rules governing “good faith” retransmission consent negotiations to provide that it is a per se violation of the statutory duty to negotiate in good faith for a television broadcast station that is ranked among the top-four stations in a market (as measured by audience share) to negotiate retransmission consent jointly with another top-four station in the same market if the stations are not commonly owned. Under the new rules, top-four stations may not (1) delegate authority to negotiate or approve a retransmission consent agreement to another non-commonly owned top-four station located in the same DMA or to a third party that negotiates on behalf of another non-commonly owned top-four television station in the same DMA; or (2) facilitate or agree to facilitate coordinated negotiation of retransmission consent terms between themselves, including through the sharing of information.


 
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This new rule will be effective thirty (30) days after publication of the rule in the Federal Register.  Retransmission consent agreements jointly negotiated prior to the effective date will remain enforceable until the end of their current terms; however, contractual provisions between separately owned top-four stations to consult or jointly negotiate retransmission agreements will be effectively voided upon effectiveness of the rule. Accordingly, upon the effectiveness of the new rule, in most markets, we will be effectively required to separately negotiate our retransmission consent agreements with MVPDs. We cannot predict what effect, if any, the requirement for separate negotiations by us and Nexstar will have on our revenues and expenses.

Further, certain online video distributors and other over-the-top video distributors (“OTTDs”) have begun streaming broadcast programming over the Internet without the consent of the broadcast station. In three cases, a federal district court issued a preliminary injunction enjoining an OTTD from streaming broadcast programming because the court concluded that the OTTD was unlikely to demonstrate that it was eligible for the statutory copyright license that provides MVPDs with the copyrights to retransmit broadcast programming. In another case, a preliminary injunction against another entity providing access to broadcast programming over the Internet was denied. There, the federal district court concluded that the OTTD was likely to prevail in demonstrating that its operations are not a copyright violation. The U.S. Supreme Court heard oral arguments with respect to the differing lower court interpretations in April 2014. A decision is expected in June 2014. In 2010, the FCC’s Media Bureau, in a program access proceeding, tentatively concluded that one OTTD had not shown that it was an MVPD for purposes of demonstrating eligibility for the program access rules, and in March 2012, the FCC, recognizing that the classification could also have implications under the retransmission consent requirements, issued a public notice seeking comment on, among other things, the proper interpretation of the term “MVPD” under FCC rules. We cannot predict the outcome of the pending litigation or of the FCC’s interpretive proceedings. However, if the courts determine that consent of the broadcast station or copyright owners is not required and/or if the FCC determines that an OTTD is not an MVPD, our business and results of operations could be materially and adversely affected. 

FCC actions may restrict our ability to create duopolies under local service agreements, which would harm our existing operations and impair our acquisition strategy.

We have entered into local service agreements with Nexstar for our stations. While these agreements take varying forms, a typical local service agreement is an agreement between two separately owned television stations serving the same market, whereby the owner of one station provides operational assistance to the other station, subject to ultimate editorial and other controls being exercised by the latter station’s owner. By operating or entering into local service agreements with more than one station in a market, we (and the other station) achieve significant operational efficiencies. We also broaden our audience reach and enhance our ability to capture more advertising spending in a given market.

The FCC is required to review its media ownership rules every four years and eliminate those rules it finds no longer serve the “public interest, convenience and necessity.” In March 2014, the FCC initiated its 2014 quadrennial review with the adoption of a Further Notice of Proposed Rulemaking (FNPRM). The FNPRM 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 shared services agreements (“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 2014.

Concurrently with its adoption of the FNPRM, the FCC adopted a rule making television JSAs attributable ownership interests 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 ownership interest in the latter station for purposes of the local television ownership rule. Parties to existing JSAs that do not comply with the newly adopted rule will have two years from the effective date of this new 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. This new rule will require us to amend or terminate any existing JSA involving the sale of advertising time in excess of 15 percent for another in-market station, including our present agreements with Nexstar to sell advertising inventory and provide other services for our stations, unless we are able to obtain a waiver from the FCC.


 
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If we are required to terminate or modify our JSAs or other local services agreements, our business could be affected in the following ways: 1) Loss of revenues - we could lose some or all of the revenues generated from those arrangements due to the loss of audience reach to our advertisers and receipt of less revenues from them. 2) Increased costs – our cost structure would increase due to loss of operating synergies associated with the addition of redundant management and overlapping sales force costs. 3) Alternative arrangements – we may need to enter into alternative agreements which may be on terms that are less beneficial to us than existing 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 between television stations, combined with an option, a similar “contingent interest,” or a loan guarantee. We have four acquisitions that are pending FCC approval that include “guideline” agreements. As a result of the recently adopted JSA rule and the processing guidelines the timing of ultimate approval for these transactions may be delayed in part because the new rule and guidelines may require amendments or waivers in order to obtain FCC approval. We intend to respond to regulatory inquiries associated with each of the announced acquisitions and to seek to bring our pending transactions into compliance with the new rule and processing guidelines to the extent feasible. Our intent is to close each of the transactions in 2014, although we cannot provide assurance that we will be able to do so.

We cannot predict what additional rules the FCC will adopt or when they will be adopted. In addition, uncertainty about media ownership regulations and adverse economic conditions have dampened the acquisition market from time to time, and changes in the regulatory approval process may make it materially more expensive, or may materially delay, the Company’s ability to close upon currently pending acquisitions or consummate further acquisitions in the future.

The FCC could implement regulations or Congress could adopt legislation that might have a significant impact on the operations of the stations we own and the stations we provide services to or the television broadcasting industry as a whole.

The FCC has open proceedings to examine shared services agreements and whether to make such agreements attributable interests under its ownership rules; to determine whether to standardize TV stations’ reporting of programming responsive to local needs and interests; to determine whether to modify or eliminate certain of its broadcast ownership rules, including the radio-television cross-ownership rule and the newspaper-television cross-ownership rule; and whether to modify its network non-duplication and syndicated exclusivity rules.

In addition, the FCC has sought comment on whether there are alternatives to the use of DMAs to define local markets such that certain viewers whose current DMAs straddle multiple states would be provided with more in-state broadcast programming. If the FCC determines to modify the use of existing DMAs to determine a station’s local market, such change might materially alter current station operations and could have an adverse effect on our business, financial condition and results of operations.

The FCC also may decide to initiate other new rule making proceedings on its own or in response to requests from outside parties, any of which might have such an impact. Congress also may act to amend the Communications Act in a manner that could impact our stations and the stations we provide services to or the television broadcast industry in general.
 
ITEM 2.                       Unregistered Sales of Equity Securities and Use of Proceeds
 
None.
 
ITEM 3.                       Defaults Upon Senior Securities
 
None.
 
ITEM 4.                      Mine Safety Disclosures
 
None.

ITEM 5.                       Other Information
 
None.
 

 
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ITEM 6.                       Exhibits
Exhibit No.
 
Description
 
10.1
 
 
Letter dated March 25, 2014, notifying Mission Broadcasting, Inc. of the election to extend Shared Services Agreement and Agreement for the Sale of Commercial Time (WUTR) (Incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q (File No. 000-50478) filed by Nexstar Broadcasting Group, Inc. on May 9, 2014)
 
10.2
 
 
Letter dated October 1, 2013, notifying Nexstar Broadcasting, Inc. and Mission Broadcasting, Inc. of the Amended and Restated Revolver Reallocation (Incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q (File No. 000-50478) filed by Nexstar Broadcasting Group, Inc. on May 9, 2014)
 
10.3
 
 
Fourth Amendment to the Fourth Amended and Restated Credit Agreement, dated as of May 6, 2014, by and among Mission Broadcasting, Inc., Bank of America, N.A. several Bank parties thereto. (Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Broadcasting Group, Inc. on May 9, 2014)
 
10.4
 
 
Fourth Amendment to the Fifth Amended and Restated Credit Agreement, dated as of May 6, 2014, by and among Nexstar Broadcasting, Inc., Nexstar Broadcasting Group, Inc., Nexstar Finance Holdings, Inc., Bank of America, N.A. and several Bank parties thereto. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Broadcasting Group, Inc. on May 9, 2014)
  31.1  
Certification of Dennis Thatcher pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
  32.1  
Certification of Dennis Thatcher pursuant to 18 U.S.C. ss. 1350.*
  101  
The Company’s unaudited Condensed Consolidated Financial Statements and related Notes for the quarter ended March 31, 2014 from this Quarterly Report on Form 10-Q, formatted in XBRL (eXtensible Business Reporting Language).*

 
*           Filed herewith
 

 
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SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
MISSION BROADCASTING, INC.
     
 
/s/ Dennis Thatcher                        
 
 
By:
Dennis Thatcher
 
Its:
President and Treasurer
 
(Principal Executive Officer and Principal Financial and Accounting Officer)
 
 
Dated: May 14, 2014