Nexstar Sees Ad Pacings Still Strong

Noting the drama in the world with a war in Ukraine, inflation and supply chain disruptions, Nexstar Media Group Chairman-CEO Perry Sook suggested to Wall Street analysts this morning that his company had delivered another “no-drama quarter” with growth across all of its revenue sources.

Asked during the Q&A by Craig Huber of Huber Research Partners about current pacings, Sook still had no drama to offer.

“We actually saw a slight acceleration in April results as far as increases over the prior year versus our Q1 finish. Broadcast and digital and networks were all up for their percentage increase versus the prior year in Q1. So we think that is a positive sign. Obviously, it is in the books. I’d say, thematically, the quarter from a core and category perspective looks a lot like the first quarter,” the CEO replied.

“Automotive is trending slightly down from prior year, but not as much as maybe some others have reported. And the other categories that have been driving our growth — entertainment, gaming and services — and all that, continue to drive that. In the first quarter, six of our top 10 categories showed increases from the prior year and 19 of our top 25. So, we don’t see things thematically that much different in second quarter, given that we have one month of the quarter in the books,” Sook explained.

Nexstar President-COO Tom Carter had earlier reviewed the contributors to record first quarter revenue of $1.2 billion. Core advertising, political, distribution and digital all posted year-over-year gains.

“Overall, television advertising grew 8.3% versus Q1 of ’21, and core television advertising of $428 million was a first-quarter record and increased 4% over the prior year quarter. Healthy demand from advertisers, aided by the Olympics, resulted in solid growth in 19 of Nexstar’s top 25 advertising categories — which more than offset continued weakness in automotive advertising,” Carter said.

“Our top performing categories were entertainment, medical/health care, travel, telcom and gaming/sports betting. In addition, Nexstar’s local sales initiatives continued to deliver healthy levels of new business, with our sales teams writing new-to-television revenue of $35 million, marking an increase of 27% over the prior year,” he said.

“Sports betting and gambling continued to be a top five category for us in the first quarter,” Carter noted.

Sook continues to be optimistic about political advertising, with revenue of $23.7 million up more than 40% from the first quarter of 2018, the previous non-presidential election year.

“We see fundraising, which is a key indicator for political ad spend, increased 91% over Q1 of 2018, according to the Federal Election Commission. We expect fundraising levels to accelerate as we move through the year, given these positive trends and recent events,” the CEO said.

Even so, Sook stuck with his forecast that this will be a record political advertising year for an off-year election and isn’t yet saying it could beat the last presidential year, 2020.

Suggesting that retrans rates had already gone above what analysts though possible a few years ago, now $5 per sub in some cases, Steven Cahill of Wells Fargo wanted to know if there is a ceiling for how high retrans rates can go.

“First of all, we certainly contemplated the rates you spoke about years ago. Recently I have moved the goal posts for what I think is in the art of the possible, given how valuable live, local news is to the bundle and to the consumer and to the value proposition that we present in our communities. I think we can go farther that perhaps I thought we could three or four years ago. So, is there a ceiling? Ultimately, it’s a negotiation. So it’s what the market will bear and what two parties can agree to. But, I think we can go further than what I thought we could ultimately reach a few years ago,” Sook replied.