Core ad revenue increased 6.5%, reflecting 8.3% growth in local spot revenue and a 1.6% increase in national spot revenue, while retransmission fee revenue and digital media revenue rose 19% and 38.4%, respectively.
Nexstar Broadcasting Group this morning reported financial results for the first quarter that included net revenue of $615.3 million, an increase of 13.9% from the same period a year ago.
The revenue numbers break down to:
- Local revenue of $193.3 million, up 8.3%.
- National revenue of $67 million, up 1.6%.
- Core ad revenue of $260.3 million, up 6.5% .
- Retransmission consent revenue of $276 million, up 19%.
- Political revenue of $9.3 million, up 446.3%.
- Digital revenue of $62.8 million, up 38.4%
In addition, first quarter income from operations totaled $117.6 million, up 9.4%.
Perry A. Sook, Nexstar chairman, president and CEO, said: “Nexstar’s strong operating and financial momentum continues in 2018 as we generated record first quarter results and another period of growth that exceeded expectations. First quarter results benefited from our expanded scale and ongoing diversification; our ability to monetize Super Bowl and Olympic advertising through coordinated multi-platform revenue initiatives; strength in political advertising spending in key markets; and, another quarter of double-digit retransmission and digital revenue growth.
“The double-digit top line increase combined with our expense discipline and focus on managing operations for cash flow drove BCF, Adjusted EBITDA and free cash flow growth before transaction expenses of 8.7%, 6.2% and 19.8%, respectively, and we brought about 20% of every net revenue dollar to the free cash flow line. Nexstar’s first quarter operating results are consistent with our forecasts and we remain confident in meeting our target for average annual free cash flow in excess of $600 million for the 2018/2019 cycle.
“Our record operating results enabled us to take further action in the first quarter to enhance shareholder value through our return of capital and leverage reduction initiatives which in total amounted to approximately $78 million. During the quarter, we allocated $33.8 million of cash from operations to repurchase approximately 500,000 Nexstar shares and paid our twenty first consecutive quarterly cash dividend of $17.3 million. In addition, we funded the $90 million acquisition of LKQD Technologies, our enterprise digital video advertising technology business, while reducing debt by $27.2 million.
“First quarter core television ad revenue increased 6.5%, reflecting 8.3% growth in local spot revenue and a 1.6% increase in national spot revenue, while retransmission fee revenue and digital media revenue rose 19.0% and 38.4%, respectively. The continued shift of our revenue mix reflects our ongoing initiatives to build scale and diversify revenue through our focus on high growth retransmission and digital opportunities.
“Furthermore, Nexstar’s television ad revenue inclusive of political advertising grew 10%. In this regard, first quarter political revenue of approximately $9.3 million marked a 131.5% increase over the 2014 period, the last comparable mid-term election cycle.
“Notably, excluding political, net revenue grew 12.5% in the first quarter compared to the prior year, reflecting Nexstar’s continued progress in leveraging the value of our television broadcasting operating model, content creation capabilities and unwavering commitment to localism. Combined first quarter digital media and retransmission fee revenue of $338.7 million rose 22.2% over the prior-year period and accounted for 55.0% of net revenue, marking the highest contribution to our quarterly revenue mix for the combined metric and significant growth over the 2017 first quarter level of 51.3%.
“The year-over-year increase in first quarter non-television advertising revenue reflects the renewal of distribution agreements with multichannel video programming distributors and OTT providers in 2017, the January 2018 accretive acquisition of LKQD, and organic growth across our expanded, profitable digital operations.
“The rise in first quarter station direct operating expenses (net of trade expense) and SG&A expense primarily reflects the expanded scale of our broadcast and digital operations as well as budgeted increases in network affiliation expense and expenses for LKQD. First quarter corporate expense excluding non-cash compensation expense was in line with our expectations.
“Local broadcast television remains the most powerful medium in the advertising ecosphere as our leading local platforms command the greatest share of audience reach within the market. With a brand-safe environment and the greatest influence on consumer purchasing and voting decisions, local broadcast television is the unrivaled, leading provider of ROI-driven marketing solutions for brand managers, advertisers and political campaigns.
“This is an incredibly exciting time for local broadcast television, as the enduring value of Nexstar’s unique local content married with marquee national network content serves as an important locomotive for both traditional MSOs and emerging OTT providers alike.
“In summary, Nexstar is executing very well on all functions including our operations, integration, capital structure and service to our local communities. Our disciplines in these areas are driving meaningful growth, consistency and visibility to our results, while positioning Nexstar with the financial capacity and flexibility to continue reducing leverage and returning capital to shareholders.
“In this regard, following our fifth consecutive annual dividend increase earlier this year and our first quarter repurchase activity, our board recently approved an expansion of the company’s share repurchase authorization for up to an additional $200 million of repurchases of our Class A common stock. In concert with our return of capital policies, we remain focused on actively managing our capital structure as another means of enhancing shareholder value.
“We continue to expect Nexstar’s net leverage, absent additional strategic activity and discretionary capital returns, to decline to the mid/high 3x range by year-end. As we continue to benefit from expected significant 2018 mid-term political spending, the growing value of our retransmission consent agreements and the profitable operation of our digital assets, we have excellent visibility to meet or exceed our free cash flow targets in the current cycle and a clear path for the continued near- and long-term enhancement of shareholder value.”
Read the company’s report here.