Nexstar 3Q Core Down 4.3%, Or Maybe Not

Nexstar Media Group reported this morning triple-digit revenue growth in the third quarter this morning, thanks to the full integration of the Media General stations it absorbed in January.

But when the new stations to the group are factored out, the growth percentage fall into line with industry norms.

On a same-station basis, core revenue, which excludes political spending, was down 4.3%, said CFO Tom Carter on a conference call with securities analysts.

But Carter said core grew 2%, if revenue from the third quarter of 2016 is adjusted downward to reflect the big premiums that the spots on NBC’s Olympic broadcasts commanded.

Nexstar CEO Perry Sook said fourth quarter sales are pacing in the mid-single digits with strength in most categories, including auto, legal, cable, medical/health, services, lotteries, entertainment and real estate.

Categories that are flat or down include fast food, furniture, retail, paid programming, groceries, telecom and drug stores, he said.

October was the best month of the year, said Sook, noting that it was up double digits. What’s more, he said, in the two-thirds of the Nexstar markets that are audited, Nexstar’s market share of revenue rose a point. “So, our local managers and local sales teams are having an impact, too.”

Sook said he is optimistic the momentum of the fourth will carry over into the first quarter of 2018. He estimated that political revenue would be “ever so slightly above $200 million” just given the markets Nexstar serves and the races that are developing. The forecast is based on the $200 million the company garnered in 2014, the most comparable year.

“Time will tell,” he said. “I can tell you our fourth quarter political is ahead of expectations and our third quarter political, in terms of our third quarter targets, finished about 25% ahead.”

Unlike Scripps, Nexstar has seen no erosion of retrans-paying cable and satellite subscribers due to cord-cutting, Carter said. “The sub counts have not changed in any meaningful way.”

Sook also noted that in the third quarter Nexstar received its first report of new paying subs from an OTT streaming service provider that is carrying its TV stations. Payments for those subs should show up in the fourth quarter, he said.

To distribute over the streaming services, Sook said, Nexstar has to first negotiate with each of the networks for the rate split and then negotiate with the streamers.

He said that Nexstar has deals in place with ABC, CBS and Fox and will have one with NBC by the end of the year. He also said he expects to have deal with all the OTT services by year’s end.

“We will see what it all amounts to.”

In response to a question, Sook said that unease among advertisers about spending in NFL games because of the anthem controversy will not directly affect Nexstar.

The local affiliate gets only nine spots per game and the demand for that time is high, he said. “It’s not been an issue because of the tremendously limited inventory we have in-game.”