“The continued power of our broadcast television business model” is why Nexstar Media Group is celebrating its highest-ever Q3 revenue — fueled not only by political advertising revenue, but also big retransmission consent dollars.
How strong was the third quarter for the broadcast media company founded by Perry Sook some 31 years ago with the acquisition of a TV station in Wilkes-Barre, Pa.?
Distribution revenue grew to $719 million, from $598 million, as Advertising dollars increased to $622 million, from $509 million.
Throw in $25 million in “other” revenue for Nexstar, and total net revenue grew by 20.7% to $1.37 billion, from $1.132 billion. Nine analysts polled by Yahoo! Finance chimed in with their estimates, resulting in a consensus estimate of $1.37 billion — right on the money for Q3.
Eight analysts offered a guess on earnings per share, and the EPS estimate was $5.41 per share.
Unfortunately, Nexstar missed on EPS, delivering net income of $187 million ($5.27 per diluted share), compared to the year-ago quarter of $25 million ($0.70).
RETRANS PROWESS
While election-oriented advertising dollars is key for broadcast TV in Q3, Nexstar’s other big revenue-generation machine involves political advertising.
Approximately 53% of Nexstar’s third quarter revenue was derived from distribution revenue. It was record-setting in Q3 — something that could very well irk pro-MVPD groups such as the American Television Alliance (ATVA) and ACA Connects, the association representing independent and small-market cable TV service providers. For Nexstar, third quarter distribution revenue of $719 million increased by $121 million, or 20.2%, over Q3 2023.
That said, a 22% increase in ad revenue in Q3 to $622 million, from $509 million, was enjoyed. That’s thanks to $154 million in political advertising, which more than offset a $22 million year-over-year reduction in non-political advertising revenue due to ongoing advertising market softness and political displacement, Nexstar said.
DEALING WITH DEBT
The Q3 report was met with satisfaction from investors, as “NXST,” which trades on the Nadsaq GlobalSelect market, was up by 4.3% to $191.93 just before 11am Eastern, as the Nexstar Q3 earnings call for analysts and shareholders was poised to reach its conclusion.
But, where does Nexstar stand with its debt? As of September 30, the consolidated debt of Nexstar and Dennis Thatcher-led independently owned variable interest entity Mission Broadcasting stood at $6.7 billion. This includes senior secured debt of $4.0 billion and is higher than much-scrutinized radio industry leader iHeartMedia.
AN IMPASSIONED PLEA TO D.C.
Getting Nexstar’s voice heard in Washington with regard to 20 years of regulatory modernization was addressed by Sook on the company’s earnings call nearly an hour after it began, answering an analyst’s question about merger and acquisition possibilities.
With Brendan Carr the likely new FCC Chairman, Nexstar could be in a position to not only add a Cleveland property for The CW Network but also likely move ahead with reopening conversations with Kevin Adell about purchasing WADL-38 in Detroit straight-up — instead of funding a position through Mission Broadcasting.
In D.C., efforts are growing for Nexstar, as Sook discussed the recent arrival of Scott Weaver, known in Washington for his time at HSA Strategies (HSA) and, before that, as Chairman of the Public Policy practice at Wiley. On September 5, Weaver became Nexstar’s SVP/Government Relations.
Specifically, Weaver will work with Sook to set the company’s legislative and regulatory
priorities, represent Nexstar’s interests to the executive branch of the federal government, Congress, and a variety of regulatory bodies, and establish Nexstar’s first-ever Office of Government Affairs in Washington, D.C.
The move is likely a strategic one that seeks to push a loosening of local TV ownership caps and national ownership percentage restrictions. And, with the coming conclusion of the Rosenworcel Commission, this will likely be Mission One for Nexstar.
