Nexstar Media(US:NXST)2023-11-08 20:56Financial Data and Key Metrics Changes - Nexstar reported Q3 2023 revenue of $1.13 billion, down from $1.27 billion in the prior year, primarily due to a decline in political advertising and temporary removal of stations from an MVPD [55][43] - Distribution revenue decreased by $43 million or 6.7% year-over-year to approximately $598 million, impacted by the removal of stations on DIRECTV for 76 days [28][43] - Adjusted EBITDA for Q3 was $236 million, representing a 20.8% margin, while excluding the CW, it was $294 million with a 27.2% margin [35][66] Business Line Data and Key Metrics Changes - Core television advertising revenue declined by 2.3% year-over-year, with a more significant decline of 6.8% when excluding the CW, although this marked an improvement from the previous quarter [24][14] - Digital revenue increased by 15.1% to approximately $99 million, driven by local digital advertising and agency services, despite some weakness in national digital advertising [29][66] - The CW generated $59 million in revenue with an adjusted EBITDA loss of $58 million, an improvement from $74 million losses in Q2 [32][66] Market Data and Key Metrics Changes - Automotive advertising, the largest category, grew by 13% over Q3 2022, indicating a rebound in this sector [26] - Political advertising revenue for Q3 was $19 million, reflecting a cyclical decline, but expectations for 2024 are optimistic with projected local broadcasting spending of $5 billion [58][27] - Subscriber attrition remained in the low single digits, positively impacted by increased carriage of CW and MyNetwork TV on YouTube TV [60] Company Strategy and Development Direction - Nexstar plans to bring the majority of its national sales efforts in-house starting January 2024 to enhance advertising sales effectiveness [17] - The company is leveraging its CW network to increase audience reach and profitability through compelling sports programming and strategic content investments [16][22] - Future growth is anticipated from successful renegotiation of distribution contracts and the expected boost from the political advertising cycle in 2024 [18][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business model and the ability to generate significant free cash flow, with a repurchase of $199 million worth of stock in Q3 [8][18] - The management team highlighted the importance of broadcast television in reaching large audiences, particularly for sports organizations [13][45] - There is optimism regarding the impact of the Disney Charter deal on subscriber attrition and overall market conditions [88] Other Important Information - Nexstar has reduced its shares outstanding by over 25% since initiating its repurchase program, reflecting a commitment to shareholder value [15][69] - The company expects to continue executing share repurchases as part of its strategy to enhance long-term shareholder value [96][95] - The CW's losses have been reduced by $75 million year-to-date compared to the previous owner, with a goal of reaching breakeven in the coming years [32][49] Q&A Session Summary Question: Can you provide clarity on the CW outlook and its financial performance? - Management clarified that cumulative losses to breakeven for the CW are expected to be in the low nine figures, with free cash flow guidance indicating better-than-expected performance [82][83] Question: How does the Disney Charter deal impact subscriber declines? - Management believes the deal will help moderate subscriber attrition, as bundling services may prevent customers from switching providers [88] Question: What is the expected impact of new deals on cash flow and monetization? - Management indicated that the combination of local and national deals is expected to enhance CPMs and overall cash flow, although some deals will not start until late 2024 or 2025 [100]