News Column

MISSION BROADCASTING INC - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations

August 14, 2014

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 June 30, 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. Our previously disclosed pending acquisitions of 7 television stations from White Knight and Nexstar in the Shreveport, Louisiana, Baton Rouge, Louisiana, Tyler-Longview, Texas, Odessa-Midland, Texas markets and our previously disclosed acquisition of one television station from Nexstar in the Quad Cities, Iowa market have been terminated due to changes in the FCC rules and policies and we no longer are under agreement to purchase these stations. In December 2013, we entered into a definitive agreement to acquire the outstanding equity of KFQX, the FOX affiliate, in the Grand Junction, Colorado market, from Excalibur Broadcasting, LLC ("Excalibur"). The acquisition will allow us entrance into this market. The FCC has not granted the consent to our acquisition of KFQX from Excalibur. On May 27, 2014, we and Excalibur terminated our purchase agreement and we assumed Excalibur's rights, title and interest in an existing purchase agreement with Parker to acquire KFQX for $4.0 million in cash, subject to adjustments for working capital. In connection with this restructuring, we paid Parker a deposit of $3.2 million on June 13, 2014. The acquisition is subject to FCC approval and other customary conditions and we are projecting it to close in 2014. We expect to fund the remaining purchase price of $0.8 million through cash generated from operations prior to closing. Effective April 30, 2014, we and Nexstar amended each of our credit agreements. The amendments reduced our total commitments under our Term Loan A Facility from $90.0 million to $60.0 million and increased Nexstar's total commitments under its Term Loan A Facility from $144.0 million to $159.0 million. Pursuant to the terms of the amended credit agreements, we may also reallocate any unused Term Loan A Facility to Nexstar and Nexstar may reallocate its unused Term Loan A Facility to us.



The following table summarizes the various local service agreements our stations had in effect as of June 30, 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



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(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. 13

-------------------------------------------------------------------------------- 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.



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 until June 19, 2016 to amend or terminate those arrangements or to obtain waivers. 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. 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. 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 attibution 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. Also in March 2014, the FCC'sMedia 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 two 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 those transactions in 2014. Also in March 2014, the FCC amended its rules governing retransmission consent negotiations. The amended rule effectively prohibits two non-commonly owned stations ranked in the top four in viewership in a market from negotiating jointly with MVPDs. Historically, we have negotiated retransmission consent agreements jointly with Nexstar. In most of our markets, we are now 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. 14

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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 June 30, Six Months Ended June 30, 2014 2013 2014 2013 Amount % Amount % Amount % Amount % Retransmission compensation $ 7,612 98.3 $ 6,041 97.7 $ 15,313 98.3 $ 11,884 97.7 Other 132 1.7 140 2.3 260 1.7 278 2.3 Net broadcast revenue before barter 7,744 100.0 6,181 100.0 15,573 100.0 12,162 100.0 Barter revenue 1,005 1,028 2,056 2,142 Revenue from Nexstar 9,808 10,042 19,456 19,304 Net revenue $ 18,557$ 17,251$ 37,085$ 33,608



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 June 30,



Six Months Ended June 30,

2014 2013 2014 2013 Amount % Amount % Amount % Amount % Net revenue $ 18,557 100.0 $ 17,251 100.0 $ 37,085 100.0 $ 33,608 100.0 Operating expenses: Corporate expenses 253 1.4 255 1.5 575 1.6 537 1.7 Station direct operating expenses, net of trade 4,256 22.9 3,657 21.2 8,622 23.2 7,005 20.8 Station selling, general and administrative expenses 530 2.9 509 2.9 1,031 2.8 1,024 3.1 Fees incurred pursuant to local service agreements with Nexstar 2,445 13.2 2,445 14.2 4,890 13.2 4,850 14.4 Barter expense 1,005 5.4 1,028 6.0 2,056 5.5 2,142 6.4 Depreciation 723 3.9 953 5.5 1,456 3.9 1,921 5.7 Amortization of intangible assets 710 3.8 1,670 9.7 1,483 4.0 3,736 11.1 Amortization of broadcast rights, excluding barter 396 2.1 465 2.7 835 2.3 950 2.8 Income from operations $ 8,239$ 6,269$ 16,137$ 11,443 15

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Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

Revenue

Net revenue for the three months ended June 30, 2014 increased by $1.3 million, or 7.6%, from the same period in 2013. This increase was primarily attributed to compensation from retransmission consent. Revenue from Nexstar was $9.8 million for the three months ended June 30, 2014, compared to $10.0 million for the same period in 2013, a decrease of $0.2 million, or 2.3%. The revenue we earn from Nexstar through our JSAs is directly correlated to the advertising revenue earned at our stations. Compensation from retransmission consent was $7.6 million for the three months ended June 30, 2014, compared to $6.1 million for the same period in 2013, an increase of $1.6 million, or 26.0%. The increase was primarily due to retransmission consent providing for higher rates per subscriber during the quarter.



Operating Expenses

Corporate expenses were consistent at $0.3 million for each of the three months ended June 30, 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 $4.8 million for the three months ended June 30, 2014, compared to $4.2 million for the same period in 2013, an increase of $0.6 million, or 14.9%. The increase was primarily due to an increase in programming costs of our legacy stations of $0.6 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 June 30, 2014 and 2013. Amortization of intangible assets was $0.7 million for the three months ended June 30, 2014, compared to $1.7 million for the same period in 2013, a decrease of $1.0 million, or 57.5%. This was primarily attributable to decreases in amortization of other intangible assets from certain fully amortized assets. Depreciation of property and equipment was $0.7 million for the three months ended June 30, 2014, compared to $1.0 million for the same period in 2013, a decrease of $0.2 million, or 24.1%. 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 June 30, 2014.



Interest Expense

Interest expense, net was $2.5 million for the three months ended June 30, 2014, compared to $4.5 million for the same period in 2013, a decrease of $2.0 million, or 44.0%. 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 $2.2 million for the three months ended June 30, 2014 and $0.7 million for the same period in 2013, or an increase of $1.5 million. The effective tax rate for each of the three months ended June 30, 2014 and 2013 was 38.9%. 16

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Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Revenue

Net revenue for the six months ended June 30, 2014 increased by $3.5 million, or 10.3%, from the same period in 2013. This increase was primarily attributed to compensation from retransmission consent, revenue from our newly acquired station, WVNY, and as 2014 is an Olympic year. Revenue from Nexstar was $19.5 million for the six months ended June 30, 2014, compared to $19.3 million for the same period in 2013, an increase of $0.2 million, or 0.8%. 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 a JSA we entered into with Nexstar for our newly acquired station, WVNY, on March 1, 2013. Compensation from retransmission consent was $15.3 million for the six months ended June 30, 2014, compared to $12.0 million for the same period in 2013, an increase of $3.4 million, or 28.9%. The increase was primarily due to retransmission consent providing for higher rates per subscriber during the period and incremental revenue from our newly acquired station, WVNY.



Operating Expenses

Corporate expenses were consistent at $0.6 million for the six months ended June 30, 2014, compared to $0.5 million for the same period in 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 selling, general and administrative expenses were $9.7 million for the six months ended June 30, 2014, compared to $8.0 million for the same period in 2013, an increase of $1.6 million, or 20.2%. The increase was primarily due to programming costs of our newly acquired station, WVNY, during the six months ended June 30, 2014 of $0.4 million and an increase in programming costs of our legacy stations of $1.2 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 $4.9 million for each of the six months ended June 30, 2014 and 2013. Amortization of intangible assets was $1.5 million for the six months ended June 30, 2014, compared to $3.7 million for the same period in 2013, a decrease of $2.3 million, or 60.3%. This was primarily attributable to decreases in amortization of other intangible assets from certain fully amortized assets. Depreciation of property and equipment was $1.5 million for the six months ended June 30, 2014, compared to $1.9 million for the same period in 2013, a decrease of $0.5 million, or 24.2%. This was primarily attributable to decreases in depreciation of property and equipment from certain of our legacy stations that reached full depreciation during the year.



Interest Expense

Interest expense, net was $5.0 million for the six months ended June 30, 2014, compared to $9.0 million for the same period in 2013, a decrease of $4.0 million, or 44.2%. 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 $4.3 million for the six months ended June 30, 2014 and $1.0 million for the same period in 2013, an increase of $3.4 million. The effective tax rates for the six months ended June 30, 2014 and 2013 were 38.9% and 39.0%, respectively. 17

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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 June 30, 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): Six Months Ended June 30, 2014 2013



Net cash provided by (used in) operating activities $ 4,364$ (1,529 ) Net cash used in investing activities

(3,315 ) (59,386 ) Net cash (used in) provided by financing activities (2,043 ) 61,890 Net (decrease) increase in cash and cash equivalents $ (994 )$ 975 Cash paid for interest $ 4,703$ 8,686 Cash paid for taxes 425 118 As of As of June 30, December 31, 2014 2013 Cash and cash equivalents $ 2,722$ 3,716 Long-term debt including current portion 230,582



232,465

Unused incremental term loan commitment under senior secured credit facility

60,000



90,000

Unused revolving loan commitment under senior secured credit facility 30,000 30,000



Cash Flows - Operating Activities

Net cash flows provided by operating activities increased by $5.9 million during the six months ended June 30, 2014 compared to the same period in 2013. This was primarily due to an increase in net revenue of $3.5 million less an increase in operating expenses (excluding depreciation, amortization of intangible assets and amortization of broadcast rights) of $1.7 million, and a source of cash from decrease in cash paid for interest of $4.0 million.



Cash Flows - Investing Activities

Net cash flows used in investing activities decreased by $56.1 million during the six months ended June 30, 2014, compared to the same period in 2013. In 2014, we paid a deposit of $3.2 million to acquire KFQX, the FOX affiliate, in the Grand Junction, Colorado market. 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. 18 --------------------------------------------------------------------------------



Cash Flows - Financing Activities

Net cash flows used in financing activities was $2.0 million during the six months ended June 30, 2014, compared to the net cash flows provided by financing activities of $61.9 million for the same period in 2013. In 2014, we repaid a total of $1.9 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 and payments of contractual maturities under our term loans of $0.3 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 June 30, 2014, we had a total debt of $230.6 million which represented 141.7% 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 June 30, 2014, we have $30.0 million unused revolving loan commitment under our senior secured credit facility. Effective April 30, 2014, we entered into an amendment to our credit agreement. The amendment reduced our total commitments under our Term Loan A Facility from $90.0 million to $60.0 million, all of which were unused as of June 30, 2014. Additionally, the amendment increased the commitment fees on our unused Term Loan A Facility from 0.5% to 1.0% and extended the quarterly principal payments commencement to December 31, 2014. Pursuant to the terms of our and Nexstar amended credit agreements, we may reallocate any of our unused revolving loan commitments and unused Term Loan A Facility to Nexstar and Nexstar may also reallocate any of its unused revolving loan commitments of up to $75.0 million and Term Loan A Facility of up to $87.2 million to us. The unused commitments under our senior secured credit facilities are expected to be partially utilized to fund the remaining purchase price to acquire two stations from Stainless for $15.1 million and one station from Parker for $0.8 million, subject to adjustments for working capital, which we project to close in 2014. The following table summarizes the approximate aggregate amount of principal indebtedness scheduled to mature for the periods referenced as of June 30, 2014 (in thousands): Remainder of Total 2014



2015-2016 2017-2018 Thereafter Senior secured credit facility $ 230,982 $ 919 $ 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 June 30, 2014, Nexstar had a maximum commitment of $495.5 million under its senior secured credit facility, of which $333.3 million of debt was outstanding and had $525.0 million of the 6.875% Notes outstanding. 19

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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 June 30, 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.



No Off-Balance Sheet Arrangements

As of June 30, 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 June 30, 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. 20 --------------------------------------------------------------------------------



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.


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