Nexstar Pitches Growth To Wall Street

While it won’t report fourth quarter and full-year 2022 financial results until Feb. 28, Nexstar Media Group rolled out a new investor presentation today for current and potential shareholders, along with Wall Street analysts. Chairman-CEO Perry Sook and his management team pitched the company’s future growth opportunities, just four days after the board of directors increased the company’s dividend payout by 50%.

“We believe that Nexstar is a ‘unicorn’ in the media and entertainment sector and the power of our platform is not something that has been seen before,” Sook said of the company’s portfolio. It includes not only the nation’s largest TV station group, but also the NewsNation cable network, the recently acquired CW broadcast network, and a broad array of digital properties. “We have the same national reach as the larger-cap media companies,” he noted.

But what makes Nexstar’s portfolio impossible to replicate, he said, is more than 200 broadcast TV stations with a reach far greater than any other local broadcaster.

“We believe there’s no other direct competitor that has the national and local scale, audience reach and financial strength that Nexstar Media Group possesses,” Sook said. And he told Wall Street that Nexstar will be using that strength to monetize assets “in ways you haven’t seen from us before.”

President-COO Tom Carter bragged that 2022 brought a renewed focus to the broadcast TV business model as investors began to question the returns from streaming services.

“There is a heightened investor focus on free cash flow generation as the primary method of creating shareholder value, which favors the broadcast models,” he said. Carter noted that subscription streamers have begun shifting to a diversified model, adding advertising-supported programming.

Carter got in some swipes at Amazon Prime Video as he compared broadcast TV viewership of NFL games to those on the streaming service.

“First we saw that in Amazon’s Thursday Night Football product. Overall NFL audiences on broadcast networks were up substantially in 2022, but not on Amazon. We saw this acutely head-to-head in the local markets where the Thursday Night Football games aired on broadcast in the markets of the teams playing, but also on Amazon Prime. In markets where audiences have a choice of where to watch the game, 67% of the NFL viewers chose to watch their in-market game on their local broadcast station, rather than on Amazon Prime,” Carter told the investors.

“Viewers prefer broadcast delivery where they can avoid technical challenges and they have a local station that they know and trust with their chosen programming that they prefer,” said Carter. He also noted the success Nexstar is enjoying with the LA Clippers broadcasting 15 basketball games on KTLA and a few other stations in California.

“What is interesting is that in the eight games so far, KTLA has delivered a total audience that is 55% larger than the 29 games which previously aired on the RSNs,” he said.

The presentation emphasized that Nexstar’s revenues are diversified, with core TV advertising accounting for 35% — split 69% local and 31% national — and 52% of revenues coming from distribution. Digital weighs in at 7%, political 5% and other 1%.

By core ad categories, auto accounts for 14%, attorneys 8%, medical/health care 6% and home repair/manufacturing 6%. That leaves two-thirds of all core TV revenues coming from a diverse group of smaller categories.

“Over the past two-and-a-half decades we have developed a team of more than 1,500 local sellers and our stations have cultivated over 40,000 advertiser relationships,” Carter said. And he noted that local advertising tends to be more stable, compared to national.

Sook pointed to growth opportunities for the company with NewsNation, The CW and ATSC 3.0.

Going into details, CFO Lee Ann Gliha said The CW should be profitable by 2025 and gives Nexstar added heft to pitch to national advertisers. She also said revenues from deployment of ATSC 3.0 could rival retrans revenues by the end of the decade.

Watch Nexstar’s new investor slide presentation here.