Nexstar’s 3Q Net Revenue Drops 10.8%

Nexstar Media Group this morning reported financial results for the third quarter of 2023 that included net revenue of $1.13 billion, a decrease of 10.8% from the same quarter of 2022.

It said “the net revenue comparison was primarily impacted by the year-over-year decline in cyclical political advertising and the temporary removal of stations from an MVPD related to contract negotiations.

Sixty-four percent of Nexstar’s Q3 net revenue was generated by distribution, digital and other revenue sources.

Excluding political advertising revenue, net revenue increased 2.4% year-over-year.

The Q3 revenue comprised:

• Core ad revenue of $391 million, down 2.3%.
• Political ad revenue of $19 million, down 85.3% from $129 million in the prior year.
• Distribution fee revenue of $598 million, down 6.7%.
• Digital revenue of $99 million (a Q3 record), up 15.1%.
• Other revenue of $25 million, up 92.3%.

Digital revenue growth was primarily due to the inclusion of The CW Network and year-over-year increases in Nexstar’s local digital advertising revenue and agency services business, which more than offset weakness in national digital advertising and ecommerce.

Distribution revenue growth was primarily impacted by the temporary removal of stations on a large MVPD for 76 days in the quarter during contract negotiations, the ongoing removal of partner stations from certain MVPDs related to continued negotiations, and continued MVPD subscriber attrition, partially offset by the renewal of distribution agreements in 2022 representing more than half of our subscriber base on improved terms and annual rate escalators, as well as growth in virtual MVPD revenue and the inclusion of The CW Network.

Perry A. Sook, Nexstar chairman, president and CEO, said: “Third quarter financial results primarily reflect the year-over-year decline in cyclical political advertising as well as the distribution revenue impact related to our successful negotiations with a distribution partner. We expect the favorable terms of new distribution agreements reached year-to-date, in 2022 and other upcoming renewals, to drive strong, high-margin distribution revenue growth. Our confidence in the strength and consistency of Nexstar’s business model and free cash flow generation is clearly highlighted by our active return of capital initiatives. During the third quarter and year-to-date, we allocated $199 million and $514 million, respectively, to repurchase shares, which we accelerated in September given the performance of our stock price. As a result, we reduced our share count to approximately 34.2 million shares as of September 30, 2023, marking a 25% reduction in our shares outstanding since the commencement of our share repurchase strategy in December 2019. We have ample capacity to continue to create shareholder value through repurchases with over $700 million remaining on our current authorization.

“Broadcast stations have the most watched television content, and we remain undercompensated for that viewership. With our significant audience reach, the broadcast model remains the only and best way to maximize viewership – something that broadcast networks and sports organizations understand. We believe that recent changes in the television ecosystem brought on by the Charter/Disney agreement will have a further positive impact on our model by creating stability in our subscriber base and freeing up programming spend from derivative cable networks to be reallocated to premium content like ours. The terms of our recent distribution and affiliation agreements reflect this viewpoint and we are very pleased with the outcome.

“We continue to be bullish about Nexstar’s future and the many exciting, near- and long-term organic growth opportunities for our business. Looking forward, we expect the balance of 2023 and full year 2024 to benefit from recently renegotiated distribution contracts. In 2024 Nexstar will realize upside from presidential election year political advertising, reduced losses related to The CW Network and an improving economic environment. We have a clear set of objectives for creating the greatest long-term value for our shareholders and will continue to deploy cash in a manner that will deliver the highest returns.”

Also, the company declared a quarterly cash dividend of $1.35 per share of its common stock. The dividend is payable on Monday, Nov. 27, to shareholders of record on Friday, Nov. 10.

Read the company’s report here.