Nexstar Media Group (NXST) FY Conference Summary Industry Overview - **Industry**: Broadcast Media - **Company**: Nexstar Media Group Key Points and Arguments 1. **Local Station Business Focus**: Nexstar emphasizes the importance of local stations as the foundation of their business, providing relevant content and entertainment to local communities, which fosters strong relationships with advertisers and audiences [4][5] 2. **Regulatory Environment**: The current political landscape is seen as favorable for deregulation, with one party controlling both houses of Congress, which may lead to the removal of outdated regulations that hinder competition with tech giants [6][7] 3. **Future of the Industry**: There is uncertainty about the future of traditional networks, but Nexstar anticipates a consolidation of local groups that could expand their footprint across the U.S. [8][9] 4. **Legal Challenges**: Potential legal challenges are anticipated regarding the removal of ownership caps and duopoly rules, but Nexstar believes the DOJ will be cooperative in merger reviews [10][11] 5. **M&A Strategy**: Nexstar has a strong track record in M&A, with 40 deals completed from 2011 to 2019, and aims to continue creating shareholder value through strategic acquisitions, particularly in larger markets [13][14][19] 6. **Synergy Opportunities**: The company sees opportunities for synergy capture through retransmission optimization and cost efficiencies, especially in owning multiple stations in a market [16][17][19] 7. **Advertising Revenue Composition**: 63% of Nexstar's revenue comes from distribution, which is more insulated from economic changes, while 37% comes from advertising, with a significant portion being local advertising [54][55] 8. **Political Advertising Outlook**: Nexstar expects strong political advertising revenue in 2026, driven by their presence in battleground states and increased spending in upcoming elections [58][60] 9. **News Nation Growth**: The network is focused on increasing awareness and credibility, leveraging local journalists to provide unique perspectives on news stories [49][50][52] 10. **Sports Programming Strategy**: Nexstar is expanding its sports programming, with 40% of CW's schedule now dedicated to live sports, and is exploring opportunities to acquire more sports rights [38][44][45] Additional Important Content - **Impact of Streaming Services**: The introduction of new streaming services is seen as a potential challenge, but Nexstar believes that broadcast components will remain essential for sports leagues [32][35][36] - **ATSC 3.0 Development**: Nexstar is involved in discussions about developing a backup GPS system using spectrum, which could lead to significant revenue contributions in the future [63][64][66] - **Market Dynamics**: The company acknowledges competition from tech companies like Amazon in local advertising markets, emphasizing the need for regulatory changes to level the playing field [12][26] This summary captures the essential insights from the Nexstar Media Group FY Conference, highlighting the company's strategic focus, regulatory environment, and market opportunities.

Financial Data and Key Metrics Changes - Nexstar reported first quarter net revenues of $1.23 billion, a decline of 3.9% year-over-year, primarily due to reduced political advertising [18] - Adjusted EBITDA for the first quarter was $381 million, down $71 million from $452 million in the prior year [26] - Adjusted free cash flow for the first quarter was $348 million, compared to $389 million last year [29] Business Line Data and Key Metrics Changes - Distribution revenue reached a record $762 million, an increase of $1 million or 0.1% year-over-year, driven by retransmission rate growth and new CW affiliations [18] - Advertising revenue decreased to $460 million, down $52 million or 10.2% year-over-year, with a notable decline in political advertising [19] - CW's profitability declined by mid-teens millions in Q1 due to increased sports programming amortization, but improved profitability is expected in 2025 [22] Market Data and Key Metrics Changes - Approximately 63% of Nexstar's revenue in Q1 came from distribution and other revenue sources, while 37% was from non-political advertising [10] - Non-political advertising revenue is forecasted to decline in the mid-single digits year-over-year for Q2, similar to Q1 results [56] Company Strategy and Development Direction - The company is focused on deregulation as a key strategic priority, aiming to reform local broadcast ownership rules [6] - Nexstar plans to capitalize on deregulation through mergers and acquisitions (M&A), with a well-defined playbook for identifying attractive assets [9] - The company is also pursuing a transition to ATSC 3.0 standards to enhance high-speed data transmission and monetize spectrum [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of revenue streams, with over 60% derived from subscription-based sources [23] - The company remains optimistic about the advertising market, despite current softness, and expects to see improvements in the second half of the year [56] - Management highlighted the importance of upcoming distribution renewals and the 2026 midterm elections as significant opportunities [17] Other Important Information - Nexstar's outstanding debt as of March 31, 2025, was $6.5 billion, with a reduction of $28 million for the quarter [31] - The company returned $132 million to shareholders, including $57 million in dividends and $75 million in stock repurchases [31] Q&A Session Summary Question: What would the confirmation of the fifth commissioner mean for deregulation? - Management anticipates that an NPRM (Notice of Proposed Rulemaking) would likely be one of the first moves by the chairman to revisit ownership rules [38] Question: Are you comfortable beginning transactions under an NPRM? - Management indicated that it would depend on circumstances and the willingness of counterparties, but they are open to calculated risks [45][49] Question: When do you expect to see the impact of cord cutting on results? - Management has not seen a material change yet but remains cautiously optimistic about potential positive trends later in the year [54] Question: How does the company prioritize M&A opportunities? - Management stated that accretive acquisitions are the primary focus, with a preference for expanding the national footprint over adding additional stations in existing markets [60] Question: What is the outlook for the advertising market? - Management expects non-political advertising to decline in the mid-single digits for Q2, similar to Q1, but anticipates a pickup in the back half of the year [56]

Financial Data and Key Metrics Changes - Nexstar reported first quarter net revenues of $1.23 billion, a decline of 3.9% compared to the prior year, primarily due to a reduction in political advertising [17] - Adjusted EBITDA for the first quarter was $381 million, representing a decrease of $71 million from the previous year [25] - Adjusted free cash flow for the first quarter was $348 million, down from $389 million in the prior year [27] Business Line Data and Key Metrics Changes - Distribution revenue reached a record $762 million, an increase of $1 million or 0.1% year-over-year, driven by retransmission rate growth and new CW affiliations [17] - Advertising revenue decreased to $460 million, down $52 million or 10.2% year-over-year, with a notable decline in political advertising [18] - The CW's profitability declined by mid-teens millions in Q1 due to increased sports programming amortization, but improved profitability is expected in 2025 [21] Market Data and Key Metrics Changes - Approximately 63% of Nexstar's revenue in Q1 came from distribution and other revenue sources, while 37% was derived from non-political advertising [9] - Non-political advertising revenue is forecasted to decline in the mid-single digits year-over-year for Q2, similar to Q1 results [21] - The CW's primetime ratings have surpassed other broadcast networks 74 times across key demographics in Q1, a significant increase from the previous season [11] Company Strategy and Development Direction - The company is focused on deregulation as a key strategic priority, aiming to reform local broadcast ownership rules [5] - Nexstar plans to capitalize on deregulation through mergers and acquisitions, with a well-defined M&A playbook targeting attractive assets in strategic markets [6] - The company is also pursuing a transition to ATSC 3.0 standards to enhance high-speed data transmission and monetize ancillary spectrum uses [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of revenue streams, with 63% of revenues coming from subscription-based sources [9] - The company remains optimistic about the advertising market, noting growth in service-based advertising despite challenges in goods-based categories [19] - Management highlighted the importance of upcoming distribution renewals and the 2026 midterm elections as significant opportunities for revenue growth [22] Other Important Information - Nexstar's outstanding debt as of March 31, 2025, was $6.5 billion, a reduction of $28 million for the quarter [29] - The company returned $132 million to shareholders, including $57 million in dividends and $75 million in stock repurchases [29] - The first lien covenant ratio was 1.67 times, well below the covenant limit of 4.25 times [29] Q&A Session Summary Question: What would the confirmation of the fifth commissioner mean for deregulation? - Management expects an NPRM to be one of the first moves by the new chairman, which could lead to revisiting ownership rules [35] Question: Are you comfortable beginning transactions during the NPRM phase? - Management indicated that it would depend on circumstances and the willingness of counterparties, but they are open to calculated risks [41] Question: When do you expect to see the impact of cord-cutting moderation? - Management has not seen a material change yet but is cautiously optimistic about potential positive trends in the future [49] Question: How would you prioritize M&A opportunities? - The focus is on accretive acquisitions, with a preference for expanding the national footprint over adding additional stations in existing markets [58] Question: What is the outlook on the advertising market? - Management noted that while non-political advertising is expected to decline in the near term, they anticipate a pickup in the second half of the year [54] Question: How does the DOJ view potential consolidation? - Management believes there is a consensus that current rules are indefensible and does not see DOJ as an impediment to in-market opportunities [82]