Nexstar Growing New Advertisers Amid Pandemic
Record second quarter revenues for Nexstar Media Group included contributions from its big Tribune acquisition and a heavy dose of political advertising, but that’s only part of the story, according to Nexstar Chairman, President and CEO Perry Sook.
“The 41% rise in second quarter net revenue reflects growth in total television advertising revenue as we drove year-over-year increases in same station new to television business and strong shares of political spending in our markets, as well as a 71% year-over-year increase in distribution fee revenues,” Sook noted in his quarterly conference call with Wall Street analysts Wednesday morning.
“In total, our sales teams generated $20.7 million of second quarter new to television revenue, marking an 11.3% rise over the first quarter and a 4.5% rise over the comparable 2019 period,” Sook said. “Our new business strategies, ongoing sales training, education and deployment of performance and focused initiatives, combined with our sharing of best practices, have proven very effective in our ability to capture ad spend and share in both broadcast and digital locally.”
As the political windfall continues unabated, Sook also reports that core is on the upswing. The company saw sequential month-over-month core advertising improvement from April to May, May to June — “and this trend is continuing in July,” the CEO said.
“Looking ahead to third quarter, while the pandemic continues to impact commercial advertising, we’re seeing the same pattern of month-over-month improvement in our pacing data. We expect to benefit from significantly increased levels of political advertising spending. And, in fact, our July political billing exceeded that of all of Q2,” Sook told analysts. “Overall, we’re encouraged by continuing signs of recovery across our station footprint and by key economic indicators, including employment data and consumer spending.” He’s also “cautiously optimistic” about the return of live sports.
While sports is a major driver of viewership, in his Q&A with analysts Sook noted that the dollar impact on local television is less dramatic. He said sports amounts to about 10% of Nexstar’s ad revenues at the local level, with the NFL accounting for 6%.
While political advertising has been extremely strong this year, EVP-CFO Tom Carter is looking for unprecedented spending in the coming months. “That candle is going to get lit right around Labor Day and run really hard for the two months of September, October and the first week of November.”
One analyst wanted to know when Sook would become comfortable that no unforeseen event is going to cause political to fall short of expectations. “I’m pretty comfortable now,” he replied. Sook noted that with in-person rallies and campaigning limited by COVID-19, television remains one place where campaigns can spend their cash hoards to try to emerge victorious on Election Day.
Apart from political, Sook told the analysts that auto has rebounded. “We’re seeing better pacing and better results in Q3 than we did in Q2, when dealers were shut down. We’re seeing certain of the OEMs move money around from market to market, based on where they have cars. That’s primarily affected some of the foreign nameplates. On the whole, I think our expectations for auto are that it will be less down sequentially going forward, as will most of our core advertising,” the CEO said.
Taking some time to talk about the human impact of COVID-19, Sook said there have been 145 confirmed cases among Nexstar’s 13,000 employees. Only one person had to be hospitalized, and that person has recovered.