Nexstar Details 1Q Minus Media General

Nexstar Media Group released its first-quarter earnings this morning, boasting of record triple-digit revenue growth, but the big numbers were due to the inclusion for the first time of the hefty returns from the Media General stations that Nexstar closed on in January.

In the call with securities analysts that followed, CEO Perry Sook and CFO Tom Carter talked about the same-station results that excluded the Media General dollars and the performance was not nearly as impressive.

According to Carter, net revenue was up 4.5% with local ad revenue up less than 1%, national ad revenue down less than 7%, retrans revenue up 32% and station website revenue up 12%.

Auto, which represents 26% of Nexstar ad revenue, “was down ever so slightly in the first quarter and it’s trending slightly better than that in the second quarter,” Sook said. “In and around a flat area is probably a good way to think about it and it won’t deviate more than a point or two beyond that.”

Nexstar’s other four other top-five ad categories were “exactly flat” in the first quarter, Sook said. “As I look at the next five, three … were either flat or up and, as I go to my next 15 categories, nine of 15 are flat or up.”

But things are looking up, said Sook. “I can tell as I sit here in the middle of the quarter that local is pacing to finish better than that in Q1 and national will be less down than our Q1 results. So we are pretty confident in our outlook and in things improving as the year goes on.”

Some of the improvement is due to “the math of the comps” and some of it is due to the “additional sales resources” that Nexstar is providing the newly acquired Media General stations, Sook said.

National advertising, which now accounts for 28% of total advertising revenue, is “somewhat challenged,” Sook said. “There are no new product categories and the business is expensive … just from a process perspective”

As the current chairman of the TVB, he said he said he is working on making spot easier to buy. “I think every advertiser would tell you that [spot is] a superior value proposition; it’s just less profitable for the agency to do business with us.”

Sook pointed out that the quarter was a milestone for Nexstar Media. For the first time, TV ad revenue accounted for less than half of net revenue, Sook said, adding that he expects advertising contribution to the net to continue to fall. “We are accomplishing our goal of becoming a diversified media company.”

Sook was also asked about reaching agreements for carriage on virtual MVPDs like DirecTV Now and PlayStation Vue. Such deals also involved the networks since they control the rights to most of the programming.

“We are working with all five of the major networks and they are in various stages of gestation,” Sook said.”It kind of depends on when the agreement came in as to when we started working on them. Some networks are ahead of others. I think we will be making some announcements in the not-so-distant future.”

“I don’t think from a financial perspective it’s going to change our standard of living … in the short to medium term. We are interested in partnering with our networks and exploring some of these opportunities.”