Nexstar Keeps Staff And Readies For Rebound

One Wall Street analyst seemed shocked when he asked about headcount reduction at Nexstar Media Group due to COVID-19 and got the answer that there had been none.

“We have left our workforce intact because we need them on the frontlines and serving our communities and providing the essential services that we do. We have not asked anybody to take furloughs, nor have we had any layoffs,” said Nexstar Chairman, President and CEO Perry Sook. That could change, he noted, if this economic shutdown goes on for a year. The company will then have to revisit everything, “but at this point we do not see the need to do that.”

Indeed, businesses are already reopening in some states. While many corporate executives have been conducting their Wall Street conference calls from their homes, Sook was speaking today from his suburban Dallas office, since the stay-at-home order for Texas has expired. He said the Nexstar headquarters staff has all returned, except for individuals with special health concerns.

“What we’re seeing is the beginning of reopening of economies. Obviously, businesses that are open and want to grow their business will be our partners going forward,” Sook said.

Nexstar posted record results for the first quarter, with the impact of COVID-19 shutdowns not hitting until March. Sook told analysts that the current second quarter will see the worst impact, but, while still early, ad pacings for the third quarter are significantly better than the second quarter.

Some political advertising has been shifted as primaries were delayed in some states, but the general election is still set for November and Sook noted that the fourth quarter “is where the game is played.” Sook even suggested that some campaigns may spend more on TV if the candidates can’t hold mass rallies. In short, Nexstar sees no threat to political or retrans — which is also growing — which combine for over 50% of projected 2020 revenues. So Sook confidently projects that Nexstar will be profitable in every quarter of this year.

Looking back at the first quarter, Sook reported that 10 of Nexstar’s top 25 ad categories were up on a same-station basis. Nexstar’s sales teams continued to generate “healthy levels” of new business revenue, “with Q1 new-to-television ad spending rising both on a quarterly sequential and year-over-year basis,” the CEO said. “In total, our sales teams generated $18.6 million of new-to-television Q1 revenue, marking an 11% rise over the prior year.”

As shutdowns began in the face of the COVID-19 pandemic, Sook said the hardest-hit ad categories were as you’d expect. “We saw declines in auto, travel and leisure, restaurants and certain retail. Not surprisingly, the categories showing the biggest year-over-year increases were attorneys, home repair, drug stores, grocery stores and package goods,” he reported.

Auto dealerships remained open in some states and are now reopening in others, so Sook is looking for a rebound. “The 0%, 84-month financing — people take advantage of those offers,” Sook said. And he noted that the National Automobile Dealers Association now reports that there are shortages of certain trucks, SUVs and other popular models.

Nexstar’s first quarter core ad revenues were up 65.7% to $417.4 million, including the addition of the former Tribune stations. On a same-station basis, EVP-CFO Tom Carter said core was down 5%, with gains in January and February followed by a fall-off in March due to COVID-19. Pro-forma, same-station political revenue was up 70% over the same period for 2016, the previous presidential election year. “Excluding political, total net revenue was up 9% on a pro-forma, same station basis,” Carter told analysts.