Sports, Sales And CW Among Highlights Cited By Nexstar Execs

Expect an expansion of station affiliates in the CW universe moving into 2024. That was mentioned within Nexstar Media Group’s third quarter earnings call this morning — along with details about the positive impact of sports licensing deals and the company’s move to take the majority of its national ad sales efforts in house at the start of the new year.

Regarding the national sales move, Nexstar Chairman-CEO Perry Sook said: “We believe that there’s no one better to sell our linear and digital ads to advertisers than us. And as we’ve discussed before, Nexstar has a unique portfolio. Together with our partner stations, we are by a wide margin the largest local television broadcaster covering over two thirds of the country, including eight of the top 10 markets as well as 17 of the top 25 DMAs.”

Sook noted that the national proposition to advertisers also encompasses national properties like The CW, Antenna TV and The Hill.

Meanwhile, CW affiliations are on the rise. Nexstar has already moved the CW to several owned stations, including outlets in San Francisco, Philadelphia, Tampa, Oklahoma City, and Billings, Mont., “with more to be announced in the coming weeks,” said Michael Biard, president and COO.

The cyclical nature of political advertising is a major factor in causing a downdraft in advertising results, discussed in the company’s earnings release. However, the company expects modest improvements in the overall rate of decline during the fourth quarter, Biard said.

“Excluding the CW for comparison purposes, our top performing categories in the [third] quarter were auto and home repair manufacturing. We’re pleased to see automotive, our largest advertising category in terms of dollars spent, maintain its growth trajectory for the fifth consecutive quarter, increasing 13% over Q3, 2022,” Biard said. “We are encouraged by the continued rebound of this category and believe there’s continued headroom given that overall automotive spending remains below 2019 levels, and automobile inventory levels have rebounded.”

Among the lackluster categories during the third quarter were radio, TV, cable and newspapers; gaming and sports betting; bank savings investments; drugstores; medication, and paid programming. About three quarters of the categories declined in the quarter, Biard said.

The importance of sports licensing deals as Nexstar continues to transform the CW — and the attractiveness of broadcasting to sports organizations seeking wide audiences — was also a big topic of discussion.

“That demand for broadcast television has allowed us to enter into exclusive agreements with a number of major sports organizations, including our just-announced deal for WWE NXT in 2024; LIV Golf, which will return in 2024; ACC football and basketball, and NASCAR starting in 2025,” Biard said.

Over 15 new advertising partners came on board for the first full season of ACC, including Verizon as the presenting sponsor and Subaru as the halftime sponsor.

“We believe these are important assets and value-creating assets for the network,” said Sook. Speaking of the impact of sports on local stations, he added: “I can tell you when we brought LIV Golf on, the local stations hit that hard and had great success this past summer and fall, monetizing that at the local level.”

Biard also referred to the NBA’s new deal with Bally’s Sports Regional Network as an indicator that sports leagues and teams are leaning toward broadcast. “[The NBA] carved out a 10-game package for broadcast. That was a telling little tidbit inside that deal. And what we’re seeing is evidence — both at the national level with the deals being done, and at the team level with the local deals being done — that the search for reach that only broadcast can deliver is really ubiquitous and applies at all levels right now.”

In discussing deals with cable operators, Sook referred to the recent distribution deal between Charter and The Walt Disney Co., as a very positive development for broadcasters more generally.

“We believe that the Disney-Charter dispute resolution supports our business model. In that agreement, the premium broadcast network content carried on ABC-owned television stations and the ESPN network got paid. The Disney+ DTC content got rebundled, which should help reduce MVPD attrition. And derivative cable networks were dropped, freeing up dollars to be reinvested in the premium channels like ours,” Sook said.

Later in the call, Lee Ann Gliha, EVP-CFO, discussed the ability of Charter-Disney-like deals to stem subscriber attrition. “These [MVPD affiliation] contracts come up only every few years. So it may take a little bit of time for that to happen. But we’re very bullish on the ability for that to come into the future of the company.”