Nexstar Bullish On Core Advertising Rebound

On the heels of reporting record results for the third quarter, fueled by even better-than-expected political ad sales, Nexstar Media Group Chairman-CEO Perry Sook told Wall Street analysts this morning that the good news is continuing even after Election Day.

“Looking ahead to the fourth quarter, we continue to see month-over-month improvement in our core pacing data — with the exception of October, due to political displacement — and our expected record results will reflect the final five weeks of political spending that led up to Election Day,” Sook said. With such strong political spending, Nexstar expects total political this year to top its previous projection of $400 million by 20%, to around $480 million. And yes, Sook says there have been inquiries about buying advertising for fundraising to battle vote outcomes in the courts.

“We are highly encouraged by the advertising rebound across our station footprint, most notably in auto, our largest core advertising category, which is pacing up significantly from where the third quarter finished,” he said. “The resumption in auto category spending is complemented by a big resurgence in big box retail spending, as well as ad spending in fast food, home improvement, attorneys, alcohol, furniture and a new category of sports wagering.”

Asked about that optimism, Sook noted that sequential monthly improvement in core has been seen since the “low ebb” of April, with the exception of October, due to political crowd-out. “Our fourth quarter auto pacing is better than 20 points from where we exited auto for Q3,” he added.

Even with political eating up so much inventory, Sook reported that Nexstar’s sales teams booked $25.3 million of new-to-television advertising in the third quarter. That’s a 22.2% increase from the second quarter and a 30.4% gain over the third quarter of 2019.

“While local and national advertisers initially reacted to the pandemic by modifying their spending, we saw rebounds in the third quarter across several key categories, generating year-over-year growth in four of our top nine categories. We also saw month-over-month improvement in our same station core advertising revenue performance, continuing from the second quarter, through the third quarter and into the fourth quarter,” the CEO told analysts.

Providing some more detail, Tom Carter, now Nexstar President-COO (and CFO until his successor is named), told Wall Street that third quarter core advertising was down mid-teens on a same-stations basis. “And with the exception of October, I would say it is going to be down mid- to high-single digits so far in Q4,” he said.

A highlight for Nexstar in the third quarter was the Sept. 1 launch of News Nation on its WGN America cable network, with much of the content for the daily primetime news block coming from Nexstar’s stations. While the new offering is drawing only a fraction of the audience and revenue of established competitors like CNN and Fox News Channel, the Nexstar execs say it is off to a good start.

Carter hailed it as taking something from nothing, programming reruns, and turning it into a product that clearly has value. “If you look at the political coverage, the largest advertiser in political coverage on WGN America’s News Nation was Facebook. Kind of strange bedfellows, I know, but they clearly see the value in this,” he told the analysts.

“I guess the headline is that 12% of America knows that News Nation is on WGN America in primetime seven nights a week. So that’s job one — increasing awareness,” said Sook. “I’m very pleased with the product,” he added.

“We’ve never had political revenue on WGN America in its existence. This year that was $1 million. Facebook has never done business with WGN America. Financials have never done business with WGN America. They’re all new advertising clients, so we’re in it for the long-haul and very pleased with the early results,” Sook added.