Nexstar Media(NXST) - 2025 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements Presents unaudited condensed consolidated financial statements for Nexstar Media Group, Inc. as of March 31, 2025, detailing assets, liabilities, operations, and cash flows, with total assets at $11.41 billion and net income of $97 million Condensed Consolidated Balance Sheet Highlights (As of March 31, 2025) | Metric | Amount (in millions) | | :--- | :--- | | Total Assets | $11,414 | | Total Current Assets | $1,402 | | Goodwill | $2,924 | | FCC Licenses | $2,949 | | Total Liabilities | $9,164 | | Total Current Liabilities | $805 | | Debt | $6,371 | | Total Stockholders' Equity | $2,231 | Condensed Consolidated Statement of Operations (Three Months Ended March 31) | Metric | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | Net Revenue | $1,234 | $1,284 | | Income from Operations | $220 | $275 | | Net Income | $97 | $167 | | Net Income Attributable to Nexstar | $108 | $175 | | Diluted EPS | $3.37 | $5.16 | Condensed Consolidated Statement of Cash Flows (Three Months Ended March 31) | Metric | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $337 | $276 | | Net cash used in investing activities | ($61) | ($4) | | Net cash used in financing activities | ($167) | ($182) | | Net increase in cash and cash equivalents | $109 | $90 | Note 1: Organization and Business Operations Nexstar is a leading diversified media company operating 201 television stations across 116 markets, with significant ownership in The CW Network and TV Food Network - The company's portfolio includes 201 full power television stations in 116 markets, affiliated with major networks like CBS, FOX, NBC, and ABC[16] - Nexstar holds a 77.7% ownership interest in The CW Network, owns NewsNation, and has a 31.3% stake in Television Food Network, G.P. (TV Food Network)[16] Note 2: Summary of Significant Accounting Policies Details significant accounting policies, including VIE consolidation, management estimates, redeemable noncontrolling interests, and retrospective adoption of ASU 2023-07 for segment reporting - Nexstar consolidates VIEs where it is the primary beneficiary, resulting from local service agreements (TBA, LMA, SSA, JSA) and purchase options[21][22] - The company adopted new segment reporting disclosure requirements (ASU 2023-07) on January 1, 2025, and applied the changes retrospectively[32] - Redeemable noncontrolling interests, related to The CW, are presented as mezzanine equity and accreted to their redemption value, impacting net income available to common stockholders[29][30] Note 3: Acquisition Details the January 31, 2025 acquisition of WBNX-TV assets in Cleveland, Ohio - The acquisition of WBNX-TV assets was for a cash purchase price of $22 million, with $20 million allocated to the FCC license[35] Note 4: Intangible Assets and Goodwill Presents significant intangible assets and goodwill as of March 31, 2025, with no impairment events identified during the quarter Goodwill and Intangible Assets (in millions, as of March 31, 2025) | Asset | Net Value | | :--- | :--- | | Goodwill | $2,924 | | FCC Licenses (Indefinite-lived) | $2,949 | | Network Affiliation Agreements (Definite-lived) | $1,447 | | Other Intangible Assets (Definite-lived) | $331 | - Estimated amortization expense for definite-lived intangible assets for the remainder of 2025 is $218 million[37] Note 5: Investments Details the 31.3% equity method investment in TV Food Network, with a book value of $753 million as of March 31, 2025, and plans for partnership renewal - The book value of the investment in TV Food Network decreased from $857 million at year-end 2024 to $753 million as of March 31, 2025[42] TV Food Network Financials (Three Months Ended March 31) | Metric | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | Net Revenue | $202 | $249 | | Net Income | $81 | $119 | | Net Income Attributable to Nexstar | $27 | $37 | - Nexstar received cash distributions of $114 million from TV Food Network during the first quarter of 2025[44] Note 7: Debt Outlines the company's $6.495 billion long-term debt as of March 31, 2025, including term loans and notes, with $31 million repaid and covenant compliance maintained Long-Term Debt Composition (as of March 31, 2025) | Debt Instrument | Principal (in millions) | | :--- | :--- | | Nexstar Term Loan A & B | $3,449 | | Nexstar 5.625% & 4.75% Notes | $2,714 | | Mission Term Loan B & Revolving Loans | $351 | | Total Outstanding Principal | $6,514 | - During Q1 2025, the company repaid $31 million of its term loans[47] - As of March 31, 2025, Nexstar had $530 million of unused revolving loan commitments available[48] Note 10: Commitments and Contingencies Outlines significant commitments and legal contingencies, including debt guarantees, multi-district antitrust litigation, a major IRS tax dispute, and an FCC Notice of Apparent Liability - The company is a defendant in a multi-district antitrust litigation regarding local TV advertising, with a trial date scheduled for April 2026[63][65] - A significant tax contingency exists related to the 2009 Chicago Cubs transaction; the IRS has appealed a Tax Court decision favorable to the company, with a ruling from the Court of Appeals expected in the first half of 2025[67][70] - The FCC issued a Notice of Apparent Liability for Forfeiture (NAL) to Nexstar and Mission for alleged violations related to station WPIX, which the company is vigorously disputing[73] Note 11: Equity Details shareholder return activities in Q1 2025, including common stock repurchases and an increased quarterly dividend - In Q1 2025, Nexstar repurchased 441,164 shares of its common stock for $75 million[74] - As of March 31, 2025, $1.5 billion remained available under the share repurchase authorization[74] - On January 29, 2025, the board of directors approved a 10% increase in the quarterly cash dividend to $1.86 per share[76] Note 15: Segment Data Provides a breakdown of financial performance by reportable segments, with the Broadcast segment contributing the majority of revenue and all segment profit Segment Performance (Three Months Ended March 31, 2025, in millions) | Segment | Net Revenue | Segment Profit (Loss) | | :--- | :--- | :--- | | Reportable Broadcast | $1,169 | $429 | | Other Segments | $77 | ($42) | | Corporate (unallocated) | $2 | ($50) | Consolidated Revenue by Source (Three Months Ended March 31, 2025, in millions) | Revenue Source | Amount | | :--- | :--- | | Distribution | $762 | | Advertising | $460 | | Other | $12 | | Total Net Revenue | $1,234 | Note 16: Subsequent Events Reports key corporate actions post-Q1 2025, including a dividend declaration and continued share repurchase activity - On May 5, 2025, the Board of Directors declared a quarterly cash dividend of $1.86 per share[94] - Between April 1, 2025, and May 8, 2025, the company repurchased an additional 209,915 shares for $32 million[94] Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes Q1 2025 financial performance, highlighting a 3.9% net revenue decrease due to lower political advertising, stable distribution revenue, and strong liquidity to manage its $6.5 billion debt Results of Operations Net revenue decreased 3.9% to $1.234 billion in Q1 2025, driven by a $52 million drop in advertising revenue, while distribution revenue remained stable Q1 2025 vs Q1 2024 Operating Results (in millions) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Distribution Revenue | $762 | $761 | 0.1% | | Advertising Revenue | $460 | $512 | (10.2)% | | Net Revenue | $1,234 | $1,284 | (3.9)% | | Income from Operations | $220 | $275 | (20.0)% | - The decrease in advertising revenue was due to a $32 million decline in political advertising (as 2025 is a non-election year) and a $20 million decrease in non-political revenue from market softness[112] - Interest expense decreased by 14.9% to $97 million, primarily due to lower interest rates and reduced outstanding debt[115] Liquidity and Capital Resources Assesses liquidity and capital resources, reporting $253 million cash, $543 million available credit, increased operating cash flow, and compliance with financial covenants on $6.495 billion total debt - Net cash provided by operating activities increased by $61 million year-over-year, primarily due to the timing of working capital receipts and payments[123] - Total outstanding debt was $6.495 billion as of March 31, 2025, representing 74.3% of the company's combined capitalization[128][129] - The company is in compliance with its maximum consolidated first lien net leverage ratio covenant of 4.25 to 1.00[135] Quantitative and Qualitative Disclosures About Market Risk Identifies primary market risk as interest rate exposure on variable-rate long-term debt, with no hedging instruments in place as of March 31, 2025 - A hypothetical 100 basis point (1%) increase in the SOFR benchmark rate would increase the company's annual interest expense by approximately $38 million[151] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The Chairman and CEO, along with the CFO, concluded that disclosure controls and procedures were effective as of the end of the reporting period[153] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, its internal controls[154] PART II OTHER INFORMATION Legal Proceedings Discusses legal proceedings arising from ordinary business, referring to Note 10 for detailed information on significant ongoing litigation not expected to have a material adverse effect - The company refers to Note 10, "Commitments and Contingencies," for a detailed discussion of ongoing litigation[156] Risk Factors Reports no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors from the most recent Form 10-K were reported[157] Unregistered Sales of Equity Securities and Use of Proceeds Details common stock repurchase activity in Q1 2025, including 441,164 shares repurchased for $75 million, with $1.5 billion remaining under authorization Share Repurchases (Q1 2025) | Period | Total Shares Purchased | Average Price Paid | Total Cost (millions) | | :--- | :--- | :--- | :--- | | Jan 3 - 31, 2025 | 92,159 | $155.81 | ~$14.4 | | Feb 3 - 7, 2025 | 20,423 | $153.75 | ~$3.1 | | Mar 4 - 28, 2025 | 328,582 | $174.98 | ~$57.5 | | Total | 441,164 | $169.99 | $75.0 | - As of March 31, 2025, the remaining amount available for share repurchases was $1.5 billion[158] Other Information Reports an amendment to Sean Compton's employment agreement regarding annual bonus criteria and confirms no Rule 10b5-1 trading arrangement changes by directors or officers - An amendment was made to Sean Compton's employment agreement, altering the criteria for his annual bonus to be based 30% on company-wide financial metrics (Net Revenue or Adjusted EBITDA) and 70% on discretionary targets specific to his business line[163] - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the first quarter of 2025[165]