CW Boosting Top Line For Nexstar

Nexstar Media Group Chairman-CEO Perry Sook told Wall Street analysts Tuesday morning that the acquisition of The CW network offset the first quarter decline in political revenues, boosting Nexstar’s total revenues to a record $1.3 billion.

“On the advertising front, our CW affiliates are already benefitting from increased advertising revenue and we expect national advertising revenue at the network to grow over time,” Sook said. He hailed the new broadcasts of LIV Golf on the network and CW app as a big success and assured analysts that any sports deals for The CW and local stations will have to be profitable — not loss leaders to build ratings.

“Everything old is new again,” the CEO commented in Q&A, recalling the days when local independent TV stations were the primary outlet for local pro sports teams. And, without naming names, he said negotiations are continuing as teams reassess their relationships with struggling RSNs.

Sook said he knew from the time that Nexstar cut its deal to acquire The CW from CBS (now Paramount) and Warner Brothers that the eight Paramount-owned CW stations would not renew their affiliation. That was announced by Paramount last week and Sook said there are “multiple expressions of interest” in each of those markets.

Also, with yesterday’s announced acquisition of KUSI San Diego, creating a duopoly with KSWB (Fox), Sook said The CW will move to a primary signal when it becomes available. The network is currently on a digital side channel of Tegna’s KFMB (CBS).

“With the upfront quickly approaching, you have seen and can expect to see a variety of new programming announcements for The CW’s ’23 and ’24 season. Consistent with our plan, our programming lineup will feature a more diversified mix of scripted and unscripted shows, which we anticipate will drive ratings growth. Several of the highly-acclaimed new scripted series included in our summer and fall schedules have already been written and produced, and are therefore not affected by the current writers strike,” Sook said.

President-COO Tom Carter said: “So far in Q2 ’23 we are seeing similar results in the national market to what we saw in the first quarter, with a modestly softening local market driven in part by a slowing rate of growth in automotive and by our unique exposure to local markets in the Top 20 DMAs, notably New York, Los Angeles, Chicago and Tampa, where local advertising markets behave more like national markets.

“Excluding The CW, our top performing categories in the quarter were automotive, home repair and manufacturing, attorneys, entertainment and travel. We’re extremely pleased to see automotive, our largest advertising category in terms of dollars spent, maintain its growth trajectory for the third consecutive quarter, increasing 12% over Q1 of ’22. While overall automotive spending remains below 2019 levels, we’re encouraged by the continued rebound in this category. The categories primarily responsible for our core advertising revenue softness were gaming/sports betting, radio/TV/cable/newspaper, medical/healthcare, insurance, and telcom,” the COO said in Nexstar’s quarterly conference call.

Carter reported that Nexstar posted $8 million of political revenues in the first quarter.

“In April we experienced the earliest spending from a presidential race in the company’s history, with early bookings from the Trump, DeSantis and Biden PACs. As a result, we remain very optimistic about our growth prospects for political advertising revenue in the ’23-’24 election cycle,” the CFO told analysts.