Nexstar 1Q Revenue Climbs 52% To $203M

Nexstar Broadcasting Group today reported first quarter net revenue climbed 52% to $203.4 million from $133.8 million in the same period a year earlier. The gain was due in part to station purchases. Specifically, in January 2015 Nexstar closed the largest acquisition in the company’s history, adding the net operations of 18 stations in nine markets from Communications Corp. of America. This was followed by the purchase of single stations in Phoenix and Las Vegas that increased Nexstar’s TV station portfolio to 107 stations under ownership or management, serving 58 separate DMAs.  

The numbers break down to:

• Local revenue was up 28.8% to $84.5 million.

• National revenue increased 30.9% to $35.6 million.

• Retransmission consent money rose 89.5% to $66.6 million.

• Political revenue decreased 91% to $360,000.

• Digital media revenue climbed 207.7% to $19.3 million.

• Net revenue rose 52% to $203.3 million.

• Income from operations was up 36.8% to $37.9 million.

Perry A. Sook, Nexstar chairman, president and CEO, commented: “Nexstar’s strong operating and financial momentum continues in 2015 as reflected by our record first quarter net revenue, BCF, adjusted EBITDA and free cash flow. We are well positioned to grow all of our non-political revenue sources throughout 2015 and we expect 2015 to mark the company’s fourth consecutive year of record free cash flow as our platform expansion and revenue diversification efforts have eliminated the cyclicality associated with political advertising.

“Nexstar’s operating, organic and M&A-fueled growth is being complemented by shareholder value enhancing initiatives such as the new network affiliations we are announcing today. With the creation of the NBC affiliate in Lafayette and the MyNetworkTV affiliate in Waco, [Texas],we stand to further optimize the value of our platform through our efficient re-allocation of Nexstar’s existing spectrum assets. These actions will elevate advertising and retransmission consent revenue and create two new duopolies with no incremental M&A costs.

“Reflecting these new agreements, Nexstar’s projected pro-forma free cash flow during the 2015-2016 cycle rises to approximately $456 million, or average pro-forma free cash flow of approximately $7.30 per share per year from our prior estimate of approximately $450 million, or average pro-forma free cash flow of approximately $7.25 per share per year with the gains weighted toward 2016 when we have the full year benefit of these new affiliations.

“During the first quarter, the benefit of recently completed accretive acquisitions and the successful execution of our strategies to leverage the content chain and diversify our revenue sources more than offset the $3.6 million year-over-year decline in political advertising. Notably, our 52% first quarter net revenue increase highlights the progress of our revenue diversification strategies with combined digital media and retransmission fee revenue of $85.9 million more than doubling over prior year levels and accounting for 42.2% of net revenue — their highest contribution to our quarterly revenue mix since these revenue streams were established — and up substantially from 30.9% in the first quarter of 2014.

“First quarter BCF, adjusted EBITDA and free cash flow increases of 49.6%, 52.1% and 70.1%, respectively, reflect the value of our initiatives to actively expand our scale through strategic, accretive acquisitions while managing costs. Our recently completed value-building transactions added 27 stations as well as a leading digital media advertising and programmatic technology provider to our growth platform and all of these assets have been successfully integrated into the Nexstar platform and operations and we are harvesting the anticipated synergies and efficiencies we forecasted at the time the transactions were announced.”

“With a focus on generating free cash flow, we remain disciplined in managing costs and in addressing our capital structure, leverage and cost of capital. First quarter corporate expense was in line with our expectations, as previously disclosed, and included $1.9 million of expenses associated with our capital markets and station group acquisition activity. First quarter 2015 free cash flow of $43.0 million grew more than 4.0 times over the first quarter of 2013, the previous non-political period, clearly highlighting the value being derived from our platform building and revenue diversification strategies.

“Nexstar’s strong first quarter television ad revenue growth was complemented by an 89.5% rise in retransmission fee revenue and a 207.7% increase in digital media revenue which both benefited from organic growth as well as our recent accretive acquisitions.  We expect our long-term distribution revenue growth trend to continue as in late 2014 additional contract renewals representing about 40% of the company’s MVPD subscribers were completed and another 35% of our subscribers will be renewed in 2015.

“Importantly, our station platform now reaches approximately 18% of all U.S. television households leaving considerable headroom for Nexstar to further expand our marketing solutions platform through additional accretive station and digital media acquisitions, while returning capital to shareholders through our quarterly dividend, reducing leverage and pursuing other initiatives that enhance long-term shareholder value.”

Read the company’s report here.