Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nexstar Media Group Inc (NXST, Financial) achieved the highest third quarter total net revenue in the company's history, driven by record distribution and advertising revenue.
- The company returned 74% of adjusted free cash flow to shareholders through dividends and share repurchases, reducing shares outstanding by 6.3% year-to-date.
- Nexstar's diversified media platform, including ownership of the CW and News Nation, continues to deliver premium programming and growing shareholder value.
- The company successfully reduced CW operating losses by $36 million year-over-year, surpassing its goal of improving the operating loss position by over $100 million this year.
- Nexstar's political advertising revenue reached a record $491 million year-to-date, surpassing the 2020 presidential election year figures.
Negative Points
- Nonpolitical advertising revenue declined by 4.5% year-over-year in the third quarter, affected by ongoing market softness and political displacement.
- The company anticipates a low double-digit percentage decline in nonpolitical advertising for the fourth quarter due to continued market challenges.
- Nexstar's income from equity method investments, primarily from its ownership in TV Food Network, declined by 29% due to lower advertising revenue.
- The company faces challenges from MVPD subscriber attrition, although it expects a slowdown in the rate of attrition in the coming years.
- Nexstar's total net leverage, excluding CW, was 3.26x at quarter end, indicating a need for continued focus on debt reduction.
Q & A Highlights
Q: How likely do you think regulatory changes are, and how does that affect your capital allocation plans given the change in administration? Also, do you think News Nation benefits from advertisers worried about brand safety?
A: Perry Sook, CEO, stated that deregulation is a top priority, aiming to compete with big tech companies. They are prepared to lead efforts in Washington, seeing it as a bipartisan issue. Regarding News Nation, they are working to dispel the notion of a toxic environment in news, and they see potential growth in both audience and revenues.
Q: How do you see the video ecosystem during the upcoming round of renewals compared to prior cycles?
A: Michael Biard, President and COO, noted that the biggest unknown is the rate of attrition. They expect to sell their linear products as they always have, with increasing appeal at the CW and News Nation. They anticipate continued resonance of their content with viewers.
Q: Can you provide context on your full-year political advertising revenue and the impact of CW affiliate stations on net retrans?
A: Lee Gliha, CFO, confirmed they achieved a record year in political advertising revenue, aligning with their guidance. The CW's profitability is not materially driven by the intercompany distribution agreement with Nexstar affiliates, and they are on track to achieve their profitability timeline.
Q: What are the prospects for eliminating the ownership cap, and how would it impact Nexstar's M&A strategy?
A: Perry Sook, CEO, sees eliminating the ownership cap as a huge opportunity, emphasizing the need for strong companies to preserve local journalism. They are investing in government relations to advocate for regulatory changes that reflect today's marketplace realities.
Q: Are there any updates on alternative uses of spectrum for monetization?
A: Perry Sook, CEO, mentioned ongoing efforts but no announcements yet. They expect to have contracts for ancillary uses of spectrum this year, which will serve as proof points for future opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
