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Duluth, Minn.)

Aug. 5--Granite Broadcasting Corp., the owner of KBJR-TV, NBC affiliate in Duluth, Minn., announced Wednesday its stock will be delisted from the Nasdaq Small Cap Market Thursday.

After an unsuccessful appeal of the decision, shares of the company now are being traded as an over-the-counter stock, but its ticker symbol -- GBTVK -- remains unchanged.

Nasdaq requires small cap companies it lists to maintain a minimum total stock value of $35 million or to record annual net income of $500,000 for at least two of the past three years.

Granite came up short on both counts.

The company has about 19 million outstanding shares. And at the start of trading Wednesday, stock was selling for 66 cents per share. At that price, Granite Broadcasting's stock had a cumulative value of $12.5 million -- just 36 percent of the minimum net income prescribed by Nasdaq.

As for earnings, Granite has finished in negative territory for each of the past four years. It posted losses of $46.9 million in 2003, $79.7 million in 2002, $76.7 million in 2001 and $27.5 million in 2000.

Profitability has continued to elude Granite so far this year, as well. During the first quarter of 2004, it recorded a net loss of $17.4 million.

Granite Broadcasting had been scheduled to announce its second-quarter financial results Wednesday but postponed the release until Friday.

"I obviously would like to see our stock price higher, and we continue to work in that direction," said W. Don Cornwell, Granite Broadcasting's chairman and CEO, during a phone interview Wednesday.

However, he maintains that Granite's listing shift from Nasdaq to the over-the-counter bulletin board should not affect the day-to-day operations of KBJR or any of the other seven television stations his corporation owns and operates.

Likewise, Cornwell predicts the transition from one trading venue to another will have no bearing on Granite's plans to enter into an agreement with Malara Broadcasting Group. Malara plans to acquire KDLH-TV, Duluth's CBS affiliate, then enter into a partnership with Granite, in which KBJR would provide sales, programming and administrative support to KDLH.

The two companies plan to enter a similar relationship in Fort Wayne, Ind., where Malara would own WPTA-TV, an ABC affiliate, and Granite would own WISE-TV, an NBC affiliate. The pending deal between Granite and Malara must win the approval of Federal Communications Commission regulators before it can proceed.

Two Duluth competitors, WDIO-TV and KQDS-TV, have registered their opposition with the FCC to the proposed partnership. They contend the deal would violate federal ownership rules that forbid any single company from controlling more than one of the top four commercial television stations in a market.

Granite and Malara have said they hope to complete their transaction some time during the third quarter of this year.

Tony Malara, CEO of Malara Broadcasting Group, was traveling Wednesday and could not be reached for comment.

There's no mystery as to why companies would rather be traded on the Nasdaq than the over-the-counter bulletin board.

"We were already a publicly traded company, but we felt it would give us greater liquidity and exposure to go on the Nasdaq," said Bill Ulland, president, chairman and CEO of Ikonics Corp., a publicly traded Duluth company that made shifted from an over-the-counter stock to the Nasdaq Small Cap Market in 1999.

A Nasdaq listing also can make it easier for a company to raise funds through secondary stock offerings, Ulland said.

If Granite Broadcasting successfully strengthens its balance sheet, it could return to the Nasdaq in the future. But Cornwell said that he believes the over-the-counter bulletin board will serve investors well in the meantime.

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