Nexstar at 33rd Annual Media Conference: Strategic Growth Focus

On Tuesday, 11 March 2025, Nexstar Media Group Inc (NASDAQ: NXST) participated in the 33rd Annual Media, Internet & Telecom Conference. The company’s leadership outlined its strategic priorities, addressing both achievements and challenges. While Nexstar celebrated record revenues in 2024, it is also preparing for a year of flat distribution revenue growth in 2025. The company’s focus remains on organic growth, cost management, and leveraging new technologies like ATSC 3.0.

Key Takeaways

• Nexstar achieved record revenue and political advertising revenue in 2024.
• The company plans to focus on cost management and organic growth in 2025.
• Key initiatives include advancing ATSC 3.0 and transforming The CW network.
• Nexstar is exploring regulatory reform opportunities to enhance its competitive position.
• The company is committed to shareholder returns through stock buybacks and debt reduction.

Financial Results

• Record revenue and political advertising revenue were reported for 2024.
• Distribution revenue is expected to remain flat in 2025.
• Nexstar captured approximately $500 million in political advertising revenue in 2024.
• Cost-saving initiatives are projected to save in the low to mid 8-figure range in 2025.
• Two-thirds of free cash flow will be allocated to shareholders.

Operational Updates

• The sales organization was brought in-house to drive organic growth.
• Cost reductions were achieved by eliminating duplicate positions and streamlining operations.
• A joint venture was created to advance the ATSC 3.0 initiative.
• The CW’s programming strategy was revamped, reducing costs by over 50% since acquisition.
• NewsNation’s distribution now rivals that of MSNBC and CNN.

Future Outlook

• Nexstar aims to offset subscriber losses with strategic pricing over the medium to long term.
• Regulatory reforms, such as the repeal of the national ownership cap, are anticipated to benefit the company.
• M&A opportunities remain a strategic focus, with preparations underway for potential deals in 2025.
• ATSC 3.0 is viewed as a key driver of future growth and value creation.

Q&A Highlights

• Discussions highlighted the moderation of cord-cutting driven by consumer preferences and pricing.
• Nexstar is advocating for regulatory reforms to protect local journalism and compete with big tech.
• The company is actively exploring opportunities in the sports rights market for value creation.
• NewsNation’s growth as an unbiased news source remains a priority.

For further details, readers are encouraged to refer to the full transcript.

Full transcript - 33rd Annual Media, Internet & Telecom Conference:

Benjamin Saff, Analyst, Deutsche Bank: Good morning, everyone. My name is Benjamin Saff. I cover the broadcasters at Deutsche Bank, and I’m very pleased to be joined this morning by Perry Sook, Nexstar’s Chairman and CEO Lee Anglia, Nexstar’s CFO. Thanks for being here.

Perry Sook, Chairman and CEO, Nexstar: Thanks for having us.

Benjamin Saff, Analyst, Deutsche Bank: So just to get started, there’s a lot to get into. You reported fourth quarter earnings a couple of weeks ago. Looking back to 2024, what were some of the highlights for Nexstar? And what are your key priorities heading into 2025?

Perry Sook, Chairman and CEO, Nexstar: Well, I think we had record revenue in 2024, which it’s hard to do that in a dying industry, but we’ve done it now, continue to put points on the board every year after year. And I think it just speaks to the uniqueness of our business model and the scale that we have. It was record political revenue for us as well. We had a number of organic growth initiatives in terms of bringing our sales organization in house and in terms of a lot of technical things we’re doing to set the plate to accelerate digital revenue. And so those were some of the highlights, I think, that we saw.

We also did a top to bottom look that we hand led at the operating expense and cost structure of the business and took a substantial double digit millions of cost out of the business and eliminated duplicate positions and things like that, which will manifest itself as it rolls through 2025. So, I mean, I think those are the major initiatives. Anything you’d want to add, please?

Lee Anglia, CFO, Nexstar: Yes. No, I think we also just did took a step forward on the ATSC three point zero initiative as well by creating the joint venture that we did that basically took a few joint ventures that we had and put them into one. So really taking a step forward there as an industry to kind of drive that business line.

Benjamin Saff, Analyst, Deutsche Bank: Great. And we’ll get into many of those topics in a bit. But first, I wanted to ask about cord cutting. Pay TV obviously has experienced elevated cord cutting over the past decade, but we’ve started to see the pace of subscriber declines actually moderate in the second half of last year. So first, what in your view are the main factors driving this moderation?

And second, do you think we’ll see further improvement in cord cutting this year?

Lee Anglia, CFO, Nexstar: Maybe I’ll take that. I think that there are probably three or four different factors that go into the moderation of the rate of cord cutting. I think first and foremost, we’ve been talking about this for over the course of the last year. We did a little bit of work with the consulting firm called Altman Solon, who had has a fifteen year history of looking at video subscribers. And what we saw is that the if you look back five years ago, the percentage of people that pay for video television is that don’t really care about sports or news really, that are just interested in entertainment programming with about 14% of the subscriber base.

Fast forward to 2023, that number is now 4%. So a large portion of the attrition that we’ve seen over the last five years is really related to people that are not caring about live sports or live news and have sort of left that ecosystem. So we have a very small amount of people that are continuing to be in the pay TV ecosystem that don’t that could potentially entrant. So I think that, that has created sort of a slowing. I think the second thing is what you’ve seen is there was sort of this idea of, oh, I can cut the cord and I can then save money.

Well, as we’ve seen over the course of the last few years, we’ve seen these direct to consumer services continue to increase their price. And so when you put a bundle together of all of the direct to consumer platforms, it doesn’t quite weigh as nicely as a paid TV package from the MVPD or an MVPD does. And then I think like the third thing is you start to see some of the MVPDs and satellite companies create better packages for the consumer. You’ve seen Charter rebundle these direct to consumer platforms into their service, which created a really nice value proposition for the consumer. You’ve seen companies like DIRECTV create skinnier bundles that are also nicer for the consumer.

So these things should all have the impact of potentially reducing the rate of attrition on a go forward basis. And I think pretty much all the research that I’ve seen out there shows that that’s going to happen beginning this year and then continuing to reduce over the next few years.

Benjamin Saff, Analyst, Deutsche Bank: Taking the next step on that, what would a sustained improvement in cord cutting mean for Nexstar’s business?

Lee Anglia, CFO, Nexstar: Well, it’s great for us, right? Because if we can have a sustained improvement in cord cutting, that just means there’s less pressure on our top line, right? As we get paid typically on a per subscriber basis from our distributors and if that rate of decline is lower, that means that the pressure that we have to increase rate and to really kind of achieve things that are really very high rates of growth are going to be there’s going to be a lot of pressure on that, and we’re going to have ability to kind of continue to sustain that revenue.

Benjamin Saff, Analyst, Deutsche Bank: Great. I wanted to ask next on pricing. You guided to flat growth in distribution revenue in ’twenty five following a relatively light renewal slate in ’twenty four, but you have 60% of your base renewing later this year. In the past, you’ve talked about how broadcast fees under earn relative to the ratings they generate. So how do you think about pricing dynamics in general?

And do you still see runway to drive pricing that can more than offset subscriber attrition over the medium to long term? Well, I

Perry Sook, Chairman and CEO, Nexstar: think that we will continue to demonstrate unit rate growth on the revenue piece of it. And we still are at a place while the gap has closed. Broadcast television aggregates still takes about a third to 35% of the viewing in a pay TV home. And we’re compensated currently in a gross aggregate basis about 20 low 20s, 22%, twenty three %, I think, of the distribution revenue that comes out of the bundle. So, there’s still a mismatch.

We still have earning potential. And I think our distribution team has done a near heroic job growing our top line to be able to outrun the rate of attrition that we’re able to project flat revenue and flat net retrans, if you want to keep score that way, in a year where we had very few renewals. So that’s our inter contract unit rates have robust numbers beside them as well. So but distribution revenue generation is a business of scale. And so I think those that have scale will likely produce better results top and bottom line than those that don’t.

Benjamin Saff, Analyst, Deutsche Bank: Over the past year or two, we’ve seen reverse compensation growth slow as the networks have shifted focus towards other platforms. How have the networks’ views of the linear TV ecosystem evolved over the past few years in your view? And what does that mean for reverse compensation and net retrans going forward?

Perry Sook, Chairman and CEO, Nexstar: Well, I think you should ask the networks how their views have changed. But I can tell you that our position is that we pay the networks for the programming and have historically paid for geographic exclusivity, so that we’re the only one showing that product in that geographic region where we have that network affiliation franchise. And we have made the point, I think, in a very linear fashion that the extent that your programming is less exclusive or not exclusive at all to us, it has materially less value. And I think we’ve been able to make that point in distribution discussions we’ve had with networks. And again, as evidenced by the fact that if our top line is not growing and the bottom line is maintaining, then obviously costs are in control.

Benjamin Saff, Analyst, Deutsche Bank: 2024 was a down year for non political advertising, both from some crowd out and on an underlying basis. But it sounds like you’re starting to see some improvement in the first quarter and you guided to positive growth for the year. What are you seeing across the advertising space more broadly? And what are the moving pieces for that business in 2025?

Perry Sook, Chairman and CEO, Nexstar: Well, I mean, some of it’s math, right? As we get through the year, there’ll be more crowd out effect from the prior year. So the comps will get easier on core advertising. We do predict an uplift as we go through the year. It’s not material, but it’s go from negative to slightly positive.

And the business for us, even though it’s small dollars, where we’re seeing nice increases is in our national networks business because in NewsNation and in the CW, we’re selling a growth story in a very mature marketplace. So we are seeing gains. And again, the as contributors to revenue top and also bottom line EBITDA, neither NewsNation nor the CW are going to change our standard of living today. But both are showing nice top line increases, which are quite frankly a little bit ahead of plan.

Benjamin Saff, Analyst, Deutsche Bank: Can you touch maybe a little bit more on the local and national markets? And are there any observations from key category verticals we should be paying attention to?

Lee Anglia, CFO, Nexstar: I don’t know that there’s a ton that you can learn from the categories. I think we said on the earnings call that we’ve been seeing a little bit of weakness continuing in auto for us as well as the insurance category, which we attribute to the natural disasters that we’ve seen here in the fourth quarter and the beginning part of the first part of the year. So I don’t think there was anything necessarily to really look at with respect to overall all categories.

Benjamin Saff, Analyst, Deutsche Bank: Got it. I wanted to move to regulatory reform, obviously very topical. We’re for it. You made some statements to that end that I would characterize as pretty optimistic. How do you think about the outlook for regulatory reform?

And what are some of the factors that make you feel encouraged that we could see movement on this in the near future?

Perry Sook, Chairman and CEO, Nexstar: Well, I think one very important thing that probably doesn’t get a lot of visibility is that the industry is united behind repealing the national ownership cap and eliminating the duopoly rules in the local marketplaces. That has not been the case to this point, right? There had been different factions. And I think that marketplace realities as well as I’ve been in a leadership position at the NAB, both in the Television Board and the Joint Board. I think we brought everyone together.

And every statement that we’ve made is unanimous and that we’re in support of deregulation of the business. And so I’ve been to Washington four different days since the first of the year and been up on the hill as well as visiting with those at regulatory agencies. And no one on either side of the aisle congressionally can look at you and defend the current rules with a straight face, right? That big tech can reach every screen in America with every kind of content with no restrictions, no boundaries, don’t have to disclose who bought their political advertising. We are willing to continue to participate under those regulations, but yet we can only reach 39% of the PV sets in the country or the population.

And so, it makes no sense. And so, I think that both under the new administration and on both sides of the aisle, if you position the discussion of local journalism versus big tech, big tech taking competing for advertisers, competing for dollars, taking our content, appropriating it without compensation. All of those things are threats against, and I would call them existential threats against, local journalism. And so I have yet to meet somebody on the Hill that doesn’t want to predict local journalism and local news because they know that those are the folks that put them in front of the viewers that get them elected, right? And so there is a groundswell of support for protecting local journalism, obviously, for reining in big tech, which is really hard to do, particularly for Congress to do.

And so we said, we’ll take the other side of that and free us to compete at least domestically on a level playing field. And that’s gotten quite a bit of traction.

Benjamin Saff, Analyst, Deutsche Bank: Can you help us better understand the process that the industry would need to go through to realize these rule changes? And are there any milestones or next steps that would key us in on whether things are moving along?

Perry Sook, Chairman and CEO, Nexstar: Well, I think the FCC can go a long way, but needs a third commissioner, a third Republican commissioner to be able to have a three-two majority to be able to move their agenda, not unlike what happens on the Hill. And so the third commissioner has been nominated. Her paperwork is working its way through the congressional committees. I think when you see a hearing for Olivia and her confirmation and then ultimately when she’s confirmed, I think you could see the FCC move fairly quickly once there was a three-two Republican majority at the commissioner level.

Benjamin Saff, Analyst, Deutsche Bank: Got it. You have a pretty strong track record with M and A doing large scale mergers that have created a lot of value for shareholders. What’s your philosophy around M and A? What are the important boxes you’d want to look at when evaluating an asset or a deal?

Perry Sook, Chairman and CEO, Nexstar: Well, it really hasn’t changed. I don’t think it’s what is actionable, what is opportunistic, what is synergistic, what acquisitions make sense for the company. And so those screen and it has to be more synergistic, more accretive than buying back our stock and not by an inconsequential margin before we’ll risk capital or management time. So none of that has changed. What do we do best?

We do best of finding carve outs of conglomerates, distressed station groups, whole company transactions, private equity dispositions. And again, we have a pretty well worn and well used playbook of how to identify, negotiate, obtain and then integrate those kinds of assets. So I think we would do more of that as those opportunities presented themselves. And would we like to own TV stations that reach essentially 100% of America? Sure.

Because then you can build your own national platform. You don’t have to buy a network. If you chose to program something nationally, you can do it organically, much like we’ve done with NewsNation and much like we’re building out the footprint of the CW. So, I think we have aspirations to paint on a larger canvas where the regulations removed that would allow us to do so.

Benjamin Saff, Analyst, Deutsche Bank: Can you talk a bit about the duopoly opportunity if those rules were to change?

Perry Sook, Chairman and CEO, Nexstar: Sure. I think we’ve said that when you can run two newspapers off the same printing press, two local television stations, two different brands, two different news brands, network brands, off of a single fixed cost structure. It is an engine to drive margins. Not only do you have the ability to capture a larger share of the revenues available to you in the marketplace, but you can convert them at a higher margin. That margin could be 15 to 25% higher than a single station depending on the circumstance and each one is different.

But it obviously is an opportunity to drive margin and again allows you to build an infrastructure to support local journalism that can have two outputs, which again is a much more efficient use of capital.

Benjamin Saff, Analyst, Deutsche Bank: Got it. I wanted to touch on political 2024, as you mentioned before, was a big year. You captured almost $500,000,000 of political advertising. Could we do a bit of a post mortem on the election, how it played out relative to your expectations and any notable observations you had there?

Perry Sook, Chairman and CEO, Nexstar: Okay. Well, it was a record year for linear television in political, record year for Nexstar if you take the Georgia runoff, which was an extraordinary event out as of Election Day, it was a record year for us. And Nexstar took about, I don’t know, 13% of every dollar spent in television by politicians this year because of our footprint. So, there was growth. The largest dollar growth came from connected TV, which grew from something approaching $200,000,000 to something approaching $1,800,000,000 or about $1,600,000,000 of growth, which was interesting.

But two things I’d say about that. One is those that really leaned into spending on connected TV didn’t necessarily get elected. So was that a failed strategy or a bad candidate? And time will tell, right? But the other thing is, if you say I ran this spot on Connected TV and look at the actual number of people any individual spot generates in terms of impressions, it’s tiny.

So it really isn’t an efficient get out the vote mechanism like buying broadcast television, which has the ability to reach every consumer in the marketplace. So I continue to believe that broadcast will maintain its position as the largest silo for revenue to go into in a political cycle. And I think the jury will be out on connected TV. Was it a shiny new object or people realizing, well, maybe those that spent money in that could have spent it more wisely on local television and got out the vote.

Benjamin Saff, Analyst, Deutsche Bank: Interesting. I know it’s early, but do you have any thoughts on how 2026 or 2028 might compare to 2024?

Perry Sook, Chairman and CEO, Nexstar: I have my I actually call it next Wednesday or actually this Wednesday in New York, I’m sitting down with the head of our ad sales to have our way too early ’26 political agenda. So, yes, so you’re even earlier than the way too early meeting that’s later this week. But listen, I look at J. D. Vance’s seat in Ohio and we’re everywhere in the state of Ohio and that will be highly contested.

And it just on and on and on. And rather than sit here and give you a bunch of anecdotes, let me have my way too early meeting and then we can put a framework around it. Maybe, but listen, I do not think things get less contentious as time goes on. And so that tends to inspire donors, which tends to drive political ad spend.

Benjamin Saff, Analyst, Deutsche Bank: It’s been a few years since you acquired The CW, and you’ve since revamped the programming strategy for the network in addition to making progress on the cost side. Can you reflect on the importance of The CW to Nexstar and how the moves you’ve made bring you closer to achieving profitability for that business?

Lee Anglia, CFO, Nexstar: Yes. I mean, we bought that back in 2022, and it was really a combination of things as why we bought it. It was both an offensive and an defensive play. An offensive play because it gave us our own network that we could use to grow and control our own destiny. We were also the largest and we still are the largest affiliate of the CW.

So it was a defensive play to protect our station group and to make sure that we were able to continue to grow the revenues within our CW stations. Since then, it’s been great. We’ve really executed a great playbook. We’ve gone through we’ve systematically reduced the cost by over 50% since we acquired the company. We really transitioned the entire programming to be something that is more broad based and more interesting to the broadcast community.

It was a very had a lot of ratings that were not as inspiring. And so what we’ve done is we’ve actually increased the amount of programming by over 40% by adding weekend programming. And we’ve changed the composition of the programming to now be something in order of 40% that is sports or sports related programming. This year, we’ve started to see some of our key sports programming launch. We have WWE NXT every week and we have NASCAR Xfinity Series racing and both sporting events have done really well in terms of the ratings in comparison to where they were.

First of all, just only what versus what CW was doing last year at the same time frame, but also just in comparison to what those sporting events were doing on cable. It really just shows the power of broadcast. So we’re excited about that. As we’re growing our ratings, we’re growing our audience. We’ve reduced the cost.

We’re now at this point where we now need to grow revenue and really benefit from the increased ratings that we’re going to have and grow advertising revenue and to really benefit from increased distribution revenue or affiliation fees getting paid for the investment that we’ve made. And so we think it will be a growth opportunity continuing on a go forward basis at the network level. And not to mention, we’ve had great success on the station side as well. It’s been great for our stations to have all of this new sports content that they can sell, a new sort of persona in the local market. And then we’ve been able to take back about 17 affiliations of The CW and put them back on our stations, which has really been quite an uplift because we do very well with the CW from an operational perspective on the station side of the ledger.

So we’re looking forward to continuing to that march towards profitability on the network side and to continue to grow our revenues on the station side.

Benjamin Saff, Analyst, Deutsche Bank: You implemented a new cost takeout plan late last year, targeting savings in the low to mid 8 figure range for 2025. Can you talk a bit more about this plan and which areas of the business it’s going to focus on?

Lee Anglia, CFO, Nexstar: Yes. We really implemented that plan mostly in the fourth quarter. So it’s for the most part, there’s a little bit that’s left over into this year, but most of it was implemented in the fourth quarter. It really targeted a few different things. One was we were able to as we continue to own the CW for longer and longer, you can kind of see incremental areas where you can further streamline or consolidate businesses to reduce costs.

And so that was part of it. We had our ad sales division, we had built up and just given where the national ad market is, we’ve looked at sort of that infrastructure and we’re able to kind of streamline some of the middle management that was in there. On the broadcast side, we kind of went around and looked at some of the efficiencies that we thought we could create throughout our different stations. Just operational efficiency, if we put a different type of camera here, it enables us to reduce some costs, things like that, that all kind of added up to, as Perry said, low double digit millions of dollars of savings that will save us from an operating expense perspective in 2025.

Benjamin Saff, Analyst, Deutsche Bank: ATSC three point zero represents one of the more exciting levers for longer term growth for your business. To that end, you recently announced Edge Beam, a JV with some of your peers. Can you talk about the progress you’ve made on ATSC to date and how this JV helps you accomplish your goals?

Perry Sook, Chairman and CEO, Nexstar: Sure. This JV basically is the combination of two other JVs we were part of and they were bumping into each other in lobbies of our manufacturers and things like that. And we said, let’s put this all together. The thing that it does is so it’s Scripps, Gray, Sinclair and Nexstar. And we have spectrum now aggregated that reaches in excess of 97% of The U.

S. So that as far as I’m concerned, that’s a nationwide or near nationwide footprint. And there’s real first mover advantage to that because for some other entities to do that together, we’d have to put together eight or nine companies to reach the same spectrum footprint. And that would take time and governance. So we think that having this established is significant.

The JV is in the market hired Egon Zehnder to find a CEO to run this entity who will then stand up a business development team as well as a sales force to monetize that. And so we get paid Nexstar two ways. One is in the toll or rental of our spectrum for whatever use is identified in the marketplace. And then secondly, if the JV makes any money, we’re a 25 equal partner with the other participants. But the other thing is the FCC the NAB filed a petition for rulemaking, asking the FCC to make a rule, which would essentially sunset ATSC one point zero, which is our current transmission standard, which would be a huge signal to the set manufacturers that you need to start putting chips in sets.

There is a definitive deadline and it’s set up now. The request is a two step process that the top 55 markets would convert from one point zero to three point zero in 2026 and then I’m sorry, 2028 and then the rest of the country would transition roughly in 02/1930. So it puts a stake in the ground. It would eliminate the simulcast requirement, which would free up more spectrum for use today. And then, obviously, the complete transition would allow us all of this spectrum.

And again, Leanne can make sure we’re sharp on the number here, but the combined per pop reach of our EdgeVeeam is what 7,000,000,000 7,000,000,000 megahertz pop. 7,000,000,000 megahertz pop. So you can put a value on that if you’re trying to in terms of the asset value. But it is we think it is the biggest single value creation level in our business as we know it today that remains to happen. And I’ve said this for years, it’s living in Texas, it’s a lot like shale oil or shale gas.

It’s always been an asset that’s available, but it took twenty years to figure out how to hydraulically frac and horizontally drill to monetize the asset. I think once the conversion starts to happen, if we’re able to convince the FCC to implement this mandate, if you will, for conversion. When the top 55% of the country, top 55 markets make that conversion, I think you’ll see things move along pretty rapidly in terms of monetization. By that time, our sales team and business development team for EdgeBeam will be in place and in the marketplace, and they’ve already have been. And the areas that we see that are of most interest are kind of Internet offload, five gs replacement service at a more efficient cost, because there are tons of five gs networks, private five gs networks out there and they’re very expensive and very expensive to maintain.

GPS enhanced GPS, which can help fleet management. It can help with precision agriculture, which is a technology that’s already in use in Korea using terrestrial based spectrum. You can do it with satellite technology today, but this is an enhanced GPS, much more accurate. And then we’re getting a lot of interest and even tests from manufacturers, particularly high end manufacturers about video in the car, whether it’s entertainment to the screen and the headrest facing the rear seats or it’s updating computer updates because 80% of those fail because the car is in the garage, the satellite can’t penetrate. And think about our spectrum, it goes through walls.

It’s a television signal, right? It goes through walls. It has a blanket radius in terms of its distribution. So, we think the as I said, this about the end of this decade when retrans revenue begins to become an annuity and not a growth vehicle for the business is when I think you’ll see spectrum monetization take off and those with the largest quantum of spectrum assets, I think, will benefit from that if they take the leadership as we’ve tried to do to lean into this opportunity.

Benjamin Saff, Analyst, Deutsche Bank: We spoke a little bit about M and A before, but can you outline how you think about capital allocation more broadly and in 2025?

Lee Anglia, CFO, Nexstar: Yes. So we if you look back at our history as a company, we’ve really created a lot of shareholder value through acquisitions. We doubled the size of the company in 2017 with the acquisition of Media General. We did it again in 2019 with Tribune Media. Those deals were 4060% accretive.

Over the last sort of four years or five years or so since the Tribune acquisition, there hasn’t been a lot of M and A to do. So we’ve had to sort of relook at our capital allocation and really kind of reinvest in ourselves by implementing a pretty aggressive stock buyback program. I think on a go forward basis, we’re hopeful that we get to see this deride and we see M and A come towards us. So in 2025, we’re just going to try to prepare a little bit for that. And so the plan for this year is we’ll spend our capital on kind of all of our mandatory obligations, which I our amortization of our term loan A, we have a small amount of incremental pension investments and then we’ve got our dividend.

And then beyond that, I think we will pay down a little bit of incremental debt, not as much as we did last year, but pay down a little bit of incremental debt to sort of prepare the balance sheet for the opportunity for M and A that we see coming forward. And then the rest of our capital will be used to buy back stock. We still feel like I talked on our earnings call. I don’t know if you had an opportunity to tune in, but we still think we’re incredibly undervalued. I mean, I think even if you look if you looked at a got a gave us somewhere between a seven and a 7.5 times multiple, our stock should be in the high 190s.

If you look

Benjamin Saff, Analyst, Deutsche Bank: at

Lee Anglia, CFO, Nexstar: just the impairment valuation that Warner Brothers and Paramount did with the cable networks, they had a negative 3% perpetuity growth and a 10.5% discount rate. If you just applied that to our free cash flow for the average of $24, 20 5 dollars, our stock would be $210 a share. So we continue to think buying back our stock is really a good way to go and should be accretive for our shareholders. So the lion’s share of what we’re doing is still going to be stock buyback. But again, we’re just we’re in a non political year.

It will be a lower amount this year, but still about two thirds of our free cash flow will go to shareholders.

Benjamin Saff, Analyst, Deutsche Bank: We’re starting to see some changes in the live sports ecosystem where teams and leagues are increasingly looking to broadcast as their preferred TV platform. You’ve done some of these deals already on the local side and with The CW. And now we have NBA coming to NBC beginning next season. How do you see the landscape for sports rights evolving over time? And what could that mean for the business?

Perry Sook, Chairman and CEO, Nexstar: Well, we’ve been in conversations with every one of those leagues and probably two dozen team owners and they all realize that a successful media plan should include broadcast reach. And with all apologies to my cable brethren out there, there seems to be a general disdain for the wired cable distribution method that was sports stock and trade for many years. And so and I think everyone realizes that in order to get broadcast reach, you may have to sacrifice some short term dollars. But then if you’re out in the marketplace, whether it’s NASCAR on us, the Lakers on KTLA I’m sorry, the Clippers on KTLA, the Texas Rangers on our CW affiliate in Dallas, that you have the opportunity to expose your product, perhaps sell tickets, sell merchandise and get people to come out to public events that you may have that would highlight your players as people as opposed to just athletes on a field or a court. And so, I think everybody gets that.

It’s just finding the right balance. The leagues are involved and all trying, I think, to build national packages, which takes games away from local availability. And we have half a dozen of those local packages. And I think the largest has 25 games, the smallest has 12 games. And they’re interesting and they can enhance we’ve actually been offered some packages.

We can give you in this market five hockey and five basketball, not really interesting to us. And again, we’re doing it the old fashioned way. We’ll pay you a rights fee. We keep all of the advertising time and that’s how we’ll monetize it. We’re not willing to share distribution revenue increases with you and we’re not willing to just air something without having commercial availabilities and that our local sales force can monetize.

And so we’ve walked away from some deals that others have done under terms that were not those to us. And so listen, it’s an interesting business at the local level. It is not really scalable. If you look at those that have done them, the deals have been Gray and ourselves and Sinclair and Scripps. Nobody has more than half a dozen of them, right?

So if everybody had all of them, that’d be two dozen of them, but you don’t have the geographic footprint of stations to be able to do all of that. So it’s not really a scalable business. We do see increasing opportunity at the CW to add sports programming. And we’re playing moneyball there, right? We didn’t win a bid for any of the NASCAR Cup races, but we did win the bid for the NASCAR Xfinity race, which is the Saturday race, which by the way, we thought had the most growth potential.

And we’ve had three races under our belt. We haven’t seen the numbers for Phoenix yet, but all three of them were the best ratings they’ve had in five years on any of those races. And so the leagues all pay attention, right? And they know now the CW can generate an audience that peaked over $2,000,000 for the Daytona race and over 1,400,000 for the Circuit of the America race out of Austin, which was in the middle of the afternoon. So there are opportunities from additional college sports and there may be another big four, big five franchise that we might be able to have a piece of.

We’re also willing to do co ventures with either streamers or cable networks to add a broadcast distribution element with the CW. And again, we’re playing moneyball there, right? And so that’s we’ll continue to be our MO as we build this network out. We’re going to crawl, walk, run and enhance value rather than destroy value through trying to swing for the fences on some big deal.

Benjamin Saff, Analyst, Deutsche Bank: Got it. You own a cable news network, NewsNation, which in recent years has achieved wide distribution and healthy growth. Can you talk through some of the recent wins for this business and your vision for NewsNation going forward?

Perry Sook, Chairman and CEO, Nexstar: Sure. Well, again, this was looking at the assets we have and figuring out what the highest misuse of them were. NewsNation is the old WGN America and it was a had evolved into a general entertainment based cable network. And when I talk to distributors, they say, we’ve got 90 of those, literally 90. And they’re not necessarily differentiated.

And it’s like, we don’t care if we carry it or not, but we sure as heck don’t want to pay for it. And so we pivoted to news and information, which there are only five of those, right? And so we did it all organically with the exception of the CapEx to build out facilities in Chicago, New York and DC. But the organic growth as the contracts for programming expired, we just turned around and plowed that money into journalism. So, we built the network out over four years.

It’s now 20 fourseven. We have beaten MSNBC since the election, I think, a dozen or more times in specific dayparts. And we’ve beaten Fox I’m sorry, we have tied Fox, but we’ve beaten CNN twice with our programming. So when I launched NewsNation as a news product with a $20,000,000 launch campaign, 11% of America knew what NewsNation was. We’re four years in and a couple of months and now 37% of America and awareness studies knows who NewsNation is.

Nice progress. I’ve made a career of being often pleased but never satisfied, and I would put this in that same category. But that still means a 37% awareness that we’ve got to go knock on six out of 10 doors in America and introduce ourselves. From a distribution standpoint, it’s fully distributed. In fact, we have marginally more pay TV households with NewsNation than MSNBC does and about the same give or take as CNN.

And so it is fully distributed, thanks to our team, both on virtual and traditional pay TV platforms. There is no over the top or direct to consumer piece at this point. Those are things that we continue to look at and figure out if there’s an opportunity for us there that doesn’t cannibalize our existing relationships. But from our perspective, it’s continued Chris Cuomo interviewed Tucker Carlson last night. I’m sure when I get the overnights for Monday, it will show that that show did a huge rating and hopefully had some knock on benefit to Leland Bitter who followed and Ashley Banfield who followed that.

And then people stuck around for Morning in America the next morning. And so, we’re building this a piece of the wall. We’re in the White House Press Room now and we had a reporter on Air Force One going back to going from this town back to DC on Sunday night or Monday morning actually. So it’s building the reputation. I think that we are totally on brand for unbiased reporting and balanced opinion shows.

And so that’s what we plan to build. And it’s the hardest thing to do, right? Because those that wanted cable news that weren’t in an echo chamber had abandoned cable news. So we’re inviting them back one at a time. And it’s very gratifying and satisfying to see that growth, but it’s also it’s a long tail development process.

But again, because of the legacy distribution and distribution revenue of the old WGN America and the fact that we did a pay as you go to build the journalism side of the business, we’ve been profitable from day one. And the network has asset value. Success for us would be asset value like CNN or like Fox News, which is a multiple of where we are today, but that’s also where the goalposts are for us now.

Benjamin Saff, Analyst, Deutsche Bank: Got it. Well, we’re just about at time and that looks like a pretty good place to end it. So thank you both.

Lee Anglia, CFO, Nexstar: Thank you.

Benjamin Saff, Analyst, Deutsche Bank: Thanks for

Perry Sook, Chairman and CEO, Nexstar: having us. Appreciate it.

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