Quarter ended March 31, 2002 vs March 31, 2001

     Net revenues increased 2% to $16.8 million for the first quarter of 2002 compared to $16.5 million for the same period a year ago. When compared to the year-over-year quarterly declines experienced over the last three quarters, the growth of the first quarter 2002 reflects stabilized advertiser demand and increased ratings and revenue shares at our nine Developing Stations net of a modest decline in revenues at KPLR.

     Station operating expenses increased 8% to $14.7 million for first three months of 2002 compared to $13.6 million for the same period a year ago, reflecting our continued investment in programming, staffing and sales related costs at our Developing Stations.

     Depreciation and amortization decreased 78% to $1.2 million in the first quarter of 2002 compared to $5.2 million in the same period a year ago due to our adoption of SFAS No. 142. Under SFAS No. 142, our goodwill and other intangible assets are no longer amortized, and therefore, the $1.2 million in the first quarter of 2002

11

Table of Contents

consists only of depreciation expense. This represents a 4% increase compared to our first quarter 2001 depreciation expense because of our capital expenditures to convert to digital broadcasting and to upgrade existing equipment.

     Corporate expenses decreased 7% to $898,000 for the first quarter of 2002 as compared to $965,000 for the same period a year ago due primarily to a reduction in professional fees and incentive compensation expense.

     Equity-based compensation of $115,000 in the first quarter of 2002 and $132,000 in the first quarter of 2001 relates to stock options issued upon the conversion of our long-term incentive plan awards during our IPO in September of 1999. These options were issued at a price below market value at the date of grant and therefore generate compensation expense over the life of the option. The decrease of $17,000 in 2002 is due to stock options that were forfeited by former employees upon leaving the Company.

     Interest expense increased to $7.7 million in the first quarter of 2002 compared to $7.1 million in the same period a year ago. This increase is primarily due to the increased interest expense on the higher accreted principal balance for our 12% senior secured notes and the accelerated amortization of prepaid financing costs associated with our former credit facility that was terminated in February 2002 (see “Liquidity and Capital Resources” below).

     The Company recorded net income tax expense of $29.2 million during the first quarter of 2002 compared to a benefit of $3.3 million in the corresponding quarter of 2001 due to the implementation of SFAS No. 142 on January 1, 2002. Prior to January 1, 2002, the Company recorded deferred tax liabilities relating to the difference in the book basis and tax basis of goodwill and intangibles. The reversals of those deferred tax liabilities were utilized to support the realization of deferred tax assets (primarily consisting of net operating loss carryforwards) and the corresponding deferred tax benefits recorded by the Company. As a result of the adoption of SFAS 142, those deferred tax liabilities will no longer reverse on a scheduled basis and can no longer be utilized to support the realization of deferred tax assets. Accordingly, the Company recorded a one-time, non-cash charge totaling $28.4 million to deferred income tax expense to establish a valuation allowance against its deferred tax assets.

     Broadcast cash flow (as defined) for the first quarter decreased 27% to $2.1 million compared to $2.9 million in the same period a year ago. This decrease was the result of our expense growth outstripping our revenue growth for the quarter due to continued investment in programming, staffing and sales related costs at our Developing Stations.

     Adjusted EBITDA (as defined) decreased 37% to $1.2 million for the first quarter of 2002 compared to $1.9 million adjusted EBITDA for the first quarter of 2001. This decrease reflects our decreased broadcast cash flow net of our decreased corporate expenses.

     The Company’s net loss for the first quarter was $37.0 million compared to a net loss for the first quarter of 2001 of $6.9 million. This $30.1 million increase in the Company’s net loss is primarily attributable to the one-time tax charge of $28.4 million incurred due to the adoption of SFAS No. 142, lower adjusted EBITDA and increased interest expense, net of a reduction in the amortization of intangibles of $4.1 million.

Liquidity and Capital Resources

     Cash flow provided by operating activities was $1.9 million for the three months ended March 31, 2002 compared to cash flow provided by operating activities of $3.5 million for the first three months of 2001. This decrease in cash flow relates primarily to decreased adjusted EBITDA and increased interest expense on capital lease facilities.

     Cash flow used in investing activities during the first three months of 2002 was $6.9 million compared to $914,000 used during the first three months of 2001. The $6.0 million increase is attributable primarily to increased purchases of broadcast and other related equipment in connection with our continued upgrade of our analog facilities and transition to digital broadcasting along with the deposit made for the purchase of WHPN, Madison, Wisconsin.

     Cash flow provided by financing activities was $393,000 for the first three months of 2002 compared to $554,000 used in financing activities in 2001. This increase relates to borrowings on our capital lease facilities, net of repayments and collateral, and the payment of financing costs on our new credit facility.

12

Table of Contents

     In February 2002, we completed our new revolving credit facility with Foothill Capital Corporation, as both agent and lender. The new revolving facility, which like its predecessor is secured by all of our television station assets, allows for borrowings up to $30 million, contains less restrictive financial covenants and expires May 31, 2004. The agent is obligated to use its best efforts to increase the facility to $40 million via the placement of additional syndication, but there is no assurance such a placement will be completed. Under this agreement, we have the option to borrow at an interest rate determined by either a base rate (Wells Fargo Bank’s prime rate) plus 3 percentage points, or at the LIBOR rate plus 4.25 percentage points. The financial covenants, which are quarterly tests beginning March 31, 2002, included in the new facility are (a) minimum EBITDA, (b) maximum total leverage, (c) minimum net tangible worth and (d) maximum capital expenditures (annual basis only). In addition to the financial covenants, the facility contains negative covenants, which, among other restrictions, require the lender’s approval for certain, station acquisitions and dispositions. At March 31, 2002 we had no borrowings outstanding under the facility and we were in compliance with all covenants.

     In March 2002, upon posting an additional $1.1 million of restricted cash as collateral, we borrowed the final $3.3 million of our capital lease facility. Borrowings under our various capital lease facilities are generally paid over four to five years. At March 31, 2002, amounts due under all capital lease facilities was $15.1 million bearing an implicit average interest rate of 8.4% per annum. We expect to incur approximately $9 million in additional capital expenditures in 2002 as we conclude our transition to digital broadcasting, as required by the FCC. After this transition is completed, we expect that our capital expenditures, apart from those related to any pending and future acquisitions, will approximate $3 million per year.

     Effective October 1, 2000, the Company’s $175 million 10 7/8% Senior Discount Notes due September 30, 2004 began accruing cash interest. The interest payment on these notes amounts to approximately $9.5 million every six months and are due on March 31st and September 30th. Since the March 2002 payment date fell on a Sunday, the payment was made on Monday, April 1, 2002. The Company’s $71.6 million 12% Senior Secured Notes begin accruing cash interest on October 1, 2002, with the first semi-annual payment due on March 31, 2003.

     At March 31, 2002, the Company had $15.6 million of cash, $2.9 million of which is restricted to collateralize capital lease obligations, and working capital of $1.6 million.

     The Company believes that existing unrestricted cash balances, funds generated from operations and borrowings under its credit agreement will be sufficient to satisfy the Company’s cash requirements for its existing operations for at least the next twelve months. The Company expects that any future acquisitions of television stations, including the Madison, Wisconsin acquisition and any of the four construction permits, would be financed through these same sources and, if necessary, through additional debt and equity financings. There is no guarantee that such other means of raising capital will be at terms acceptable to the Company, and accordingly, current stockholders could be adversely affected by such financings.

Critical Accounting Policies and Estimates

     The Company’s discussion and analysis of its financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to broadcast rights, bad debts, intangible assets, income taxes, and contingencies and litigation. The Company bases its 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 these estimates under different assumptions or conditions. The Company believes the following critical accounting policies affect its more significant judgements and estimates used in the preparation of its consolidated financial statements.

   Programming Rights

13

Table of Contents

     The Company’s programming rights are stated, on a gross basis, at the lower of amortized cost or estimated realizable value. The Company regularly evaluates estimated realizable value of programming rights based on current usage and revenue performance and projected future revenue and usage of such programs. Changes in the Company’s programming schedule could impact the estimated realizable value of programming. For the quarter ended March 31, 2001 programming rights impairment charges totaled $14,000. There was no impairment of programming rights during the quarter ended March 31, 2002.

   Impairment of Asset Values / Accounting for Intangibles

     The carrying values of our long-lived assets (tangible, identifiable intangible and goodwill) are reviewed for impairment based upon estimated future cash flows of the stations. As of March 31, 2002, the Company has not recorded any impairment related to long-lived assets. Future adverse changes in market conditions, changes in technology and other factors could reduce the expected future cash flows and result in an impairment charge.

   Revenue Recognition

     The Company records revenue from the sale of airtime related to advertising and contracted time at the time of broadcast. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company utilizes information available to the Company, including the timing of payments and the financial condition of our customers, to estimate the allowance for doubtful accounts. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. It should be noted that the Company does not have a significant concentration of accounts receivable from any single customer or industry segment.

   Accounting for Income Taxes

     Prior to January 1, 2002, the Company recorded deferred tax liabilities relating to the difference in the book basis and tax basis of goodwill and intangibles. The reversals of those deferred tax liabilities were utilized to support the realization of deferred tax assets (primarily consisting of net operating loss carryforwards) and the corresponding deferred tax benefits recorded by the Company. As a result of the adoption of SFAS No. 142, those deferred tax liabilities will no longer reverse on a scheduled basis and can no longer be utilized to support the realization of deferred tax assets. Accordingly, the Company recorded a one-time, non-cash charge totaling $28.4 million to deferred income tax expense in the quarter ended March 31, 2002 to establish a valuation allowance against its deferred tax assets. In the event we were to determine that we would be able to realize a deferred tax asset in the future that is in excess of the net recorded amount, an adjustment to the valuation allowance and a tax benefit would be recorded.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     The Company’s credit facility has a variable interest rate. Accordingly, the Company’s interest expense could be materially affected by future fluctuations in the applicable interest rate. At March 31, 2002, the Company had no borrowings under the credit facility.

     We are also exposed to risk from a change in interest rates to the extent we are required to refinance existing fixed rate indebtedness at rates higher than those prevailing at the time the existing indebtedness was incurred. We have senior discount notes totaling $175 million and senior secured discount notes totaling $71.6 million due in the years 2004 and 2005, respectively. Effective October 1, 2000, the senior discount notes began accruing cash interest. The interest payment on these notes amounts to approximately $9.5 million every six months. Effective October 1, 2002, the senior secured notes will begin accruing cash interest and the first semi-annual interest payment of approximately $4.2 million will be due on March 31, 2003. Based upon the quoted market price, the fair value of the senior discount notes and senior secured discount notes was $177.6 and $61.6 million, respectively, as of March 31, 2002.

14

Table of Contents

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

     The Company currently and from time to time is involved in litigation incidental to the conduct of its business. The Company maintains comprehensive general liability and other insurance, which it believes to be adequate for the purpose. The Company is not currently a party to any lawsuit or proceeding that management believes would have a material adverse affect on its financial condition or results of operations.

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

     (a)  Exhibits.

     (b)  Reports on Form 8-K

     The Company filed one report on Form 8-K with the Securities and Exchange Commission on April 11, 2002 containing disclosure pursuant to Item 9, “Regulation FD Disclosure”, regarding the Company’s consideration of a proposed purchase offer for one of its largest stations and the Board of Directors’ decision that it is in the best interest of the Company and its stockholders to consider the possible sale of that television station.

15

Table of Contents

SIGNATURES

     Pursuant to the requirements 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.

16

Table of Contents

EXHIBIT INDEX

17