NXST - Earnings call transcript Q4 2017 | Nexstar Media Group, Inc.

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Operator

Good day, everyone, and welcome to the Nexstar Media Group 2017 Fourth Quarter Earnings Conference Call. Today's call is being recorded. At this time, I'd like to turn the conference over to Mr. Joseph Jaffoni, Nexstar Investor Relations. Please go ahead.

Joseph N. Jaffoni

morning, XXXX thank fourth good Nexstar for and Group's Media quarter Evan, everyone, you and joining Thanks, conference call. management's and I'll to as disclosure. get presentation momentarily, comments We'll as your questions the answers, review first, but safe harbor and well made the and conference this that and known materially subject federal historical securities comments statements statements within and call deemed to uncertainties factors may laws the may be expressed All results forward-looking than and forward-looking unknown the of to during from statements different other fact or future meaning other risks, in of implied cause statements. are be those Nexstar's Important could those other cause the risks, SEC. materially that forward-looking from factors expressed differ and assumptions future in results in statements filings other with to the specified are it's turn Sook. CEO, and over At the Chairman, Nexstar pleasure Perry host, this to call Founder, time, your to President my Please go ahead, Perry.

Perry A. Sook

quarter us successful This for discuss operating you, Nexstar's Thank you, our year's discuss momentum Thank all, and fourth full-year morning, everyone. continued financial and including today to Joe, we will and last joining integration XXXX good record morning, results. as cash Media as initiatives returns discuss our return period, activities, and beyond. other of our of in flow free our growth outlook and General. and to the XXXX XXXX-XXXX and drive leverage ongoing for capital We'll reduction well shareholder

estimates. the of me Carter, As consensus growth marked Officer, an call of financial the on metrics with and morning. and Chief another this the always, that record transformational here across company period our quarter conclusion Tom is year active Nexstar's fourth Financial exceeded all for

sustained transaction, terms XXX-day We've Broadcasting. of businesses. and Busch integration year lead intense a carried our President as to of up of preparedness were plan embarking put our leading over the Nexstar of Raifman digital XX following on the an planning expanded digital our Digital Subsidiary. level We positions. D.C. manager our resources the of to Nexstar with sales President revenue former markets. regional manager structure for doubled the as to operations news and a unwound future of bureau prepared We general right identifying in just this the point, added of filled our place promotion our and half-a-dozen markets teams I'm of extracting General sense combining serve of that of and and serve dedicated out a unprofitable maintaining in of our structure. a opportunities our strategic the coordination, bringing came to believe result last were reflects ahead their as colleagues performance as across digital work and cooperation and and to sheet a ongoing January's together and efficiencies balance and our level their and manner our grateful with expected operational were Media our progress our that and and strong in projections our diversifying Our revenue take commitment. driving well of their as near-seamless XXX us transaction synergies healthy General capital precise of execution economic flexible reflects in of in successes bear urgency to companies streams my we appointment the and Media personnel To of benefits Washington, that Tim Greg the others closing a the and individual enabled offices I both as synergy growth the on to advantage ago, that the to teams front size

the division, loans our a new infrastructure to our a video including leading extended acquire year, benefits in into and delivered we quarter we the and we full-year take advantage accretive had strategic themselves. which carriage. and some, an to brings shareholders in broad, year. of numbers LKQD, financial results refinanced ourselves advertising networks and we positioned platform growing facility beyond. free cash upsized of expecting all say OTT expanded entered with record to capital During to is affiliation We accretive or our and speak incredibly were returns term fourth manner, for independent we the for our also company, rights flow to transaction agreements We throughout an Nexstar's digital then credit agreed and that active XXXX

Taking highlights million operating as the Our net form stations cash and returning and of and I – flow scale sixth the broadcast dividends decline in our XXX% our offset free XXXX let and and included revenue million to to profile, $XXX in over debt of year flow well consecutive select our retrans the in record up one-time digital me before, related and XX.X% $XXX expanded of reduced in and EBITDA advertising cyclical as Island; LKQD, to of Net pick stock mentioned was free on to ongoing invested growth approximately revenue and XXXX XXX% the Rhode advertising accretive by approximately million, to $XXX million, shareholders free cash the our as our CW a scale, share million assets the Summer NBC revenue growing we we and Providence, of cash of $XXX technology transaction year-over-year rose political our XXXX the acquisitions non-recurring repurchases. fee revenue. million, excluding some flow $XXX the with costs. streams non-core of With Olympics. through $XXX rose including platform of of stats, our inclusive revenue billion Adjusted $X.X of financial and results. EBITDA in

cash expect generate these the factors, flow cycle. to free slightly benefit per and extraordinary benefit of derived a for and Olympics, As the million over the with from factors, Winter flow on midterm year, the as cash Jobs of as growth, key to shares well expects enactment a the million annual recurring Cuts the including digital of Act. free to average year Nexstar XXXX-XXXX election revenue $XXX ended retransmission Based be Tax and XX spending, levels we result, just continued year from we under This outstanding. Nexstar

the would prior our shifting our of flow cycle cycle. million target, target While results approximately forma from on the flow free year XXXX-XXXX pro should exceeded cash to it evident terms XXXX-XXXX be have of in that average $XXX per we're free our XXXX cash for we

Our fact XXXX-XXXX now be X an interest. sequential I sheet fourth the for highlights, and including which XX that multiple should top Nexstar in well rate say, our expectations of go after cash on categories, saw our top X flat. QX, of will as review X again overall for I'll with seventh the interest – includes balance virtual year-over-year hikes, advertising through we X beginning and will as posting a year. the full Nexstar, and a other improvement update guidance items finances taxpayer healthy this core quarter core our was In increases quarterly category of Tom categories

In with and a the a we addition, fourth nicely in another nonpolitical Alabama, and which XXX% cash QX. driving We've notwithstanding free business benefits about quarter record anticipate in XX% posted cash XX% grow triple-digit in bookings flow. drive of early growth brought of free dollar line, revenue advertising. return drove to increase increase rise the BCF that a expected net political be revenue sources strong model, combined our a operating Utah the to leverage of surpass to of growth Reflecting with quarter the the and will adjusted and flow PAC in spending all year-over-year quarter in political expectations our in metric XX% all decline XX% scale XXXX what net every fourth in of we special of midterm revenue our EBITDA, elections stage political, in levels of advertising to for

General development revenue which political local growth newly XX% X% reported core across of with to growth odd-year sales We Our we of now fourth million, for our implemented of million, total revenue to new revenue. Nexstar's revenue see core during business $XX.X television healthy political Media and upside approximately reflect Extending of revenue record ahead continues markets. QX metric levels ad new the approximately or of $XX we was of this practices XXXX. ad cycles, QX as business have our the quarter acquired to

continued with combined our long-term solid renewal XXXX, contract, retransmission sales with healthy and those levels on our last levels when of and the for just enhancement levels million a to billion spend ad General closing, and combined full-year cash and fee retrans in ongoing in to complemented visibility to positive platform XXXX television and fourth to subscriber that advertising and key revenue accounted these over give to core see revenue its of highlighting fourth rise our ongoing remained increase expectations consistent shareholders. add the combined in fee record new throughout With revenue. revenue be – internal we're year-over-year to economy, $XXX the resulting totaled base the Nexstar's which in political MVPD revenue respect or revenue for revenue expected in a our by-and-large XX% of The retransmission political of our profitable or Our with for targets it under $X to of year. the net quarter flow completed in OTT what and was In XX% the embedded marks consent consent revenue agreements, with and and basis from guidance XXXX. exceeding mix, both operations. our These delivering growth new non-television agreements, coming XXX% history. operations milestone the million, are shift growing mix on factors, and late and near- an that were retransmission value same-station was our in free distribution of in accounted we quarter increase core XXXX, which new I'll related synergies media Medial clause that ad quarter a our revenue digital by digital our $XXX improvements another after-acquired in fourth path quarter ad are retransmission master XXX% agreements beginning in fourth revenue tracking and our clear us revenue, compares prior-year reflects our for net potential period, to our digital upside

of amount we In it share per the times and the X annual to a we increase full XX our – X end announced rate Finally, XX% at mid-to-high to shares quarterly the times, – February, X of XXXX. with in $X.XX million now with expect of net the ended and mid approximately turn by lower dividend cash leverage more another outstanding. range we by XXXX to than

and exactly other the to be year. shareholder-friendly throughout ability, have we liquidity initiatives are terms of We the our deleveraging where in we to expected consider

about optimistic regulatory flow the as which tax services, ability the Our we continue TV generation, free shareholder all next-gen for in FCC-supported make the stakeholders, me operate. at ownership cash very new while value well and all our recent of communities FCC, super-serving our changes significant as the enactment to build to law, the

Tom? over turn provide to will Now, on let financials. me detail further our call who the Tom

Thomas E. Carter

Thanks, an which I'll capital statement, good on points morning, of as I'll with Perry, some structure items, well and housekeeping as after and of a income start some data, balance sheet QX everybody. some Nexstar's review our guidance. provide update

were XX/XX/XX results QX actual Media the mentioned, XXX%. their which local as ended net to one-time disclosed million. noted of Nexstar revenue, expenses remaining results release, with As of pro increase over both in was ending divested and of note with One X.X%. XXXX. same-station revenue stations, from actual $XXX XXXX million XXXX, guidance the reflects one-time the housekeeping the QX station Perry Core was periods previously cash lagged $X.X and gross net actually. million, of seven ex-political the EBITDA, legacy low divested three stations, flow, this million, presented, results, cash full On generally stations will XX-month and the over were company's which was assets. and XX/XX/XX. on XXXX. revenues $XXX.X was up from to XX% of last well expenses the grow – XXX% represents transaction. driven QX With which in that reflect in portfolio, stations, operations, the Nexstar's single-digits XX/XX/XX broadcasting revenue ending $XX.X a the which digital growth six X.X%, and the $XX digital effective million, same-station after the sequentially combined and Because third profitability $XX.X grew reflect divested was The of operations two million their the the of the as election metric. a somewhere XX% the up General-related all basis of million period issued net digital specific the Nexstar Standards adjusted morning's presidential revenues up X- was station XX%. XX% in QX over and up Board. six of X/X incurred to XXX% the years digital transaction year Political digital depending QX, or General favorably both Media free national same forma for growth over slightly and by were closing compares legacy to the continuing divestitures, the and the revenues of impact Core nice because revenue the but adopt which total and of $XXX a of of quarter retrans metrics, increases new by XXXX, at for were up around Media accounting QX, Nexstar Same-station and inclusive ago, assets million regard million, same three-month had simultaneously The website of broadcasting of the comparable period for And General revenue which period revenue months rate, $XX $XX before highs all-time of broadcast Nexstar here, Financial over flow, up revenue record Accounting company local

result, national, net of present political will quarter commissions. the XXXX, related company first As a the and local, revenues agency of digital beginning their in

digital national of XXXX, the their also political as provide XXXX comps So, commissions. net QX, as same-station for we metric well report revenue as beginning local, we agency the with quarters will in and

In adjusted expenses, program income net longer barter broadcast future for the and the affiliation rose income, revenue exchange of related expense certain addition, and direct flow, all quarter of network Fourth million, of expenses $XX expenses forecast don't EBITDA acquired primarily or assets, report. expense for of cash trade, to excluding time advertising non-cash relating $X.X expanded affiliation and stations from the changes reflecting and net will operations million we operating fourth at local SG&A recognize and the strategic to barter free expenses, to the impact items, These increases XXX.X%, fixed transaction had no time operations, respectively, cash station the down expense digital Comparable network XXX.X% were $XX past and $X.X million material. or comp company's actually corporate in provided million pro-forma Net corporate Nexstar's $XX.X quarter. were cost during and below inclusive of of programming. costs, X.X%. of of General the quarter quarter, Media million these other initiatives well we the QX the was transaction-related the flow.

in last full-year, a previewed expenses expenses, capitalized, the fees million the will transaction we meaningful the success-oriented be transaction-related $XX or amount not we primarily could right severance in strategic that cash line on in For came at call. and additional XXXX. activity, Absent incur not with roughly

$XX is stock of $XX million comp. $XX $X million year, anticipated QX be the new compensation first the overhead QX. incentive to million quarter for XXXX awards in the expected project or of and the quarter, million to approximately $XX Non-cash exclusive recurring For million corporate to cash first we equity reflecting for will issuance the

expected reclassifications For to XXXX, out corporate digital effect expenses these have items are reflect Neither of non-operating to pension of on some corporate, cash net going as items – we or reclassified have to income any as free as have gains either flow. them administrative is expenses, forward. moving to well EBITDA, effect any these of expect

items I'll as review the the XX/XX/XXXX. Turning balance of sheet, key to

a our $X.X X.X of outstanding three million billion costs of a the first total covenant of the times including $XXX first debt, and debt issuance leverage with note million, X.X and times. and series, associated $XXX which again, $XXX leverage represented on balance term loans revolver, on basis in of net debt the approximately Covenant net Nexstar's was As mentioned, included lien lien Perry net versus million, that. times. X terms net was

closed end approximately the January of $X.XX million $XXX transaction, compared total Net MEG taking approximately at debt the the $XXX our during and million. net XX/XX/XXXX with reduction at to debt when XXXX. stood full-year at quarter $X.X payments we the into cash at term Additionally, the loan, of on was XX amounted billion the consideration billion

free is enables advantage reduce to capital and which leverage, basis. return both significant Our opportunistic to of platform a generating on take opportunities, cash, us strategic shareholders, scheduled and

and from acquisition of in approximately that addition sheet, and in shareholders the which of January cash told, worth by D.C. to allocated news announced One $XXX and form operations sorry, I'm during million – bureau XXXX. So, million million there repurchases we in early initiatives. leverage in million reduction, reducing closing All the to merger, closed were that and cash the the balance rest put to We $XXX noting shareholder of approximately the in repurchases, of our the $XX since building. debt invested we $XXX full-year, series strategic dividends. platform million amounts quarterly the and from this for LKQD, of $XXX put dividends MEG item use the operational on XXXX of to we our platform other

retirement compared quality in cash in million XXXX. QX in XXXX million of $XX.X of benefits QX QX was and million an they're those while $XX XXXX, it to to of interest sheet from We plan retirement a the meaningful this amount unfunded is retiree have MEG's balance perspective million, in $XXX XX% And not from stands funded. employee only reduced compared QX million to $XX.X $XX.X obviously, terms currently and that amounted total perspective $XX and million but to the receiving. the funds at a expense from expense pension interest

taxes in benefit compared to million will recognized be QX million that $XX to approximately a cash QX $XXX of QX and of to $XX in interest XXXX. $XXX XXXX million approximate of XXXX. cash taxes in million amounted expect of expense We

December, As Tax tax of income effective XX/XX/XXXX. rate for you reduced from and know, the the federal enactment was Cuts years Act in in after corporate the – with XX% beginning Jobs to XX%

reduction XXXX. the in tax $XXX in reduction company's in of liability applicable All The only of of company accounting corporate liability the for by in tax effective a net the federal income The period the provisional XXXX. of income tax tax requires resulted is federal re-measure deferred act the reduction periods enactment. beginning deferred provided net tax existing the deferred benefit corresponding guidance the and in million to rate

related $XXX-million of timely approximately the in XXXX $XXX million effect of station $X $XX.X million million. to cash to CapEx expense was related million the totaling of costs. income benefiting the taxes totaled for tax and $XXX taxes quarter company the income $X.X and repack the to expect remaining Excluding $XX the to million XXXX, $XX.X cash is local quarter with with we QX and spectrum in approximate terms of accrued of news for and benefit the relinquishment million Act million for the Nexstar's Tax million the approximately the Nexstar re-measuring, tax infrastructure year and of investments the and for which $XX station beyond,

XXXX expect CapEx in QX We million. approximately $XX of to

approximately the Our was QX one-time $X.X expenses. million $XXX of of flow cash transaction free inclusive million

free approximately consensus favorably of fourth such, As recurring approximately with from of cash our quarter operations million $XXX million. $XXX.X compared flow

flexibility. of than less We debt prepayment in and ideal to and balance believe our cost represents fixed average floating capital capital of weighted X% continue attractive of and refinancing structure the both

we point have and leverage headway well a staggered with substantial profile have we'll significant reduction. debt which moment reduction XXXX, As at towards expect until no that significant ago, maturities we maturity noted

flow Media costs, of free Nexstar fixed successfully it our will and variable goals value. generating close acquisitions, local including maintaining terms management's balance while realization, synergy the optimizing top-line, on take sheet follow continue reduce of well pursue other capital across pay of our plan and This our positive focus the we've relates Group accretive repurchase to to capital building is shareholder deployed and dividends, the will us and allowing control in and structure, cap Nexstar integration, In shares, for As significant structure. additional cash executing allocation, service growth outlook approach to generation, free operation, can our communities. cash leverage, all to functions flow actions enhance summary, that selective support

call. during in on we fed remarks average LIBOR or XXXX-XXXX I'll next As Perry guidance periods. a back This resulting it initiated a amount closing flow Q&A. That for to – today before some higher multiple basis. review for such, financial the actions of in includes cycle fully-taxed years, million free cash the the the the of concludes two both in also over approximately annual turn $XXX approximately assumptions for $XX.XX for share

Perry A. Sook

we than Tom. lot. more approach built a Thanks, That was two decades platform company a through building. the disciplined Nexstar's founding ago, Since to

executing strong operating the to advertising our as our Local to media remains consistency, free record transactions the the and service and greatest market. Our the digital local proven expand and an by within In each leading stations with communities playbook our operate in industry a enhancement our be shareholder accretive financing exceptional add to the shareholders. value we the role ecosphere value. and ability our our within to place execution significantly consolidator terms flow cash transaction, audience highlights the a followed in reach identifying, local command results platforms we well-established while to of most unrivaled where and enhance businesses of large acquired share Nexstar's and of powerful television broadcast to delivering or of small, allocation, capital

unique with news an traditional for emerging locomotive for ROI-driven local Nexstar's digital incredibly with medium married local and most important network content, not local produced provider to of value marquee campaigns. access only unique and trusted marketing proposition programming well. on is for the and value broadcast locally The but purchasing brand-safe and This our environment be local the our As programming an television emerging MSOs solutions and national influence decisions, of brand advertisers, platforms content content combines unrivaled the the an providers among Nexstar's is news distribution consumer and in and to is OTT viewers unbeatable managers, a broadcast time political local greatest enduring voting television. as leading markets. exciting new leading for

As now on X.X are ATSC we OTT under to to for another monetize our is spectrum new front, just way to opportunities we're doing to spectrum which gain builds our momentum. consortium stream with as traction Nexstar, create also the working revenue continuing initiatives our

In organic addition with to the political growth, surpass profitable visibility XXXX's retrans this revenue flow. return revenue all spending digital record to high year, mid-term cash and of and operation assets meaningfully all have combined acquisition-related significant of of growth, contractual the will company XXXX a position level free that the

for realities ATSC the the to media through successes, services. contributions, year. Long-term, of confidence modernize are outperformance our members X,XXX FCC's instills great the Their and every the FCC's valued they rest local to communities, highly do our approximately is of per as great the by reflected for of new next-gen rule of have management another rules continue national standards shareholders. and day our guidance that more X.X All viewers, and the thanked than to that per benefit nation ownership marketplace, new of businesses and as of will and to media XXXX-XXXX, I mentioned TV team $XXX or team Tom encouraged call, in advancing we users, Nexstar beginning our year. the reflect XXXX the evolving as our intention At be ownership XXXX I the share all our in previously the – our approximately well me million, for and innovative $XX.XX the local support

are On interest, on value professional our the the ever. why So, the for Nexstar the Nexstar, understand it's experience of this I'm easy now your call shareholder you morning. long-term to team, and over optimism joining behalf future continued than near for growth holds for XX and thank in for here us entire my years industry, and for with what prospects stronger regarding of and excited support,

Now, areas Operator? let's open Q&A address call interests. our to your of time the to specific

Operator

go Benchmark ahead. Kurnos from question Our Please from first Dan comes Company.

Daniel Kurnos

morning. Good Great. Thanks.

Let start, on me just core. Perry,

it there you NBC. Just category, from were color. incremental sense a of some out maybe if QX could like Obviously, crowd us give monthly some pacing's sounds

core? remarks, some should did So, thinking you be in the prepared about just sub-timing. OTT how your QX we mention And then of

specialist into Your benefit little I transition I in just expect was of noise there. if this really being XXXX just would from markets, sequentially. don't be smaller was the a to retrans, about sense retrans down us if you the your know out give how there a some you're OTT know impact a really Thanks. kind of more but that bit could you talked year on since of sub play helpful. you and

Perry A. Sook

Yeah.

the look NBC And above the math, if expectations I QX, all a at are think of of of Retrans, political if are that's at we you – core with affiliates. looking and quarter we're you portfolio. for do XX% pacing digital, mentioned finish stations performance the kind there. of flat the to our XX Olympics, XXX our

are The not. XX% other

both going the growth and XXXX. exactly stations with on last which they showed Winter double-digit in in So, line same-station percentage the are the quarter, Olympics that for in growth XXXX for the post virtually the NBC to is basis

core guidance of XX% of I And the in in the quarter. on is kind slightly that and up portfolio your embedded the rest and think average basically flat QX, and our of our is you're purposes if played per up the slightly per of double-digits is that in expectations. our is at looking is illustration, up For core the game for flat, to – where

banking flat; of had furniture go somewhere was nine and I between then were up. attorneys, XX%. information, in was Auto down QX, down six categories food bit, down cable we and back if to and category the retail, X% was insurance, X%; medical the a little As all fourth X% up fast quarter;

think I a little So, see in QX. quarter, we'll than automotive softer first

maybe automotive Olympics, for little think sum kind have this I in at I our years the is we of gave level, or local past first morning total from they the quarters you in than more the that of But past. stayed quarter. a by-and-large, away expectations embedded spending again, guidance bit think

and no surprises from expectations our So, certainly end. had our

to today As in has only to All – revenue. consistent receiving mean, on as revenue seen. the Access certainly a I agreements, I signed are late yet OTT those platform, the year basis some the in is the we quarter. that OTT benefit CBS of the But retrans, be mentioned, were or late is

yet billing add not revenue cycle our where existing we've to gone we've a retrans been to through number. So, able

explain noise, it, may some you call as in So, that of QX. the

Daniel Kurnos

Great. Perry. Thanks, right. All

Operator

Our comes Please from Watts next Aaron question ahead. Deutsche Bank. from go

Aaron L. Watts

Hey, guys.

on up core follow quick a ad sales. Just

of with year, something Just thinking broadcast this picture nice World thinking is lift? TV, in a back about provide you're Cup could that in terms the

Perry A. Sook

Well, again, affiliates well, on our XX% revenue. – terms to me of of our number. about are we've math in got – Fox give the Aaron, do let represents approximately you the portfolio Fox

show they gain again, a So, the and nice be not affected. stations would other could

the will on it'll think portfolio. events and that as for any use stations specific stations as going to catalyst characteristics. I will Night will of have those then you're that well affiliates, part a its effect to portfolio, and rest the fall Fox a are Football coming perform being performing on extraordinary compete events, of well catalyst, be in network own it our against So, have on Thursday to which extraordinary can But a have the little each

Aaron L. Watts

me. Okay. And one Got more for then it. just

is at that's you As and this, a look your in on cord acceleration any the concern? markets? And as XXXX XXXX, something of back cutting you that cadence look in

Perry A. Sook

the we've our looked now seen last counts have in diminution subscriber is the months, the at year. in sub last and three months of simple we I no. mean, no virtually over The three answer counts

embedded months. we the was for depressed with the which attrition last there you, in summer, programmed we seasonality catastrophes programmed guidance our And during will that sub we three in that. a no not is or have if So, share might weather-related virtually saw counts number, attrition have but

So to be there upside current the attrition the metric could projected our we're at not time. of seeing retrans that because

Aaron L. Watts

Okay. Thanks.

Operator

go from question next from B. ahead. Riley comes Our Barton FBR. Crockett Please

Barton Crockett

think, And the comments the the down wondering I some you if Thanks at – address you've joint cap. rules, years? the meaningful case-by-case I national I Perry, how the for test. at potential over could the – of of great. the for M&A things how taking could could And environment be wondering changes point. loosening an Nexstar this each allowance of drive local four mean, how will for look you of rid few I top seeking got Okay, of one impactful the next you FCC agreements we've because of that think elimination was voices ownership side, And have sales the and question. stations. also these We've break rule these got and you you loosening, on getting handled. was if When And got are you. how ownership

Perry A. Sook

front, prepared are have we'll exit that to a broadcast. We're engaged local that rationalize politically comments their, Sure. Well, on that going in new The ownership allow discussions that the of these time. ownership the or rules the that improvement to course those to and be are priority, and we more over to us for rationalize here of believe rules, next there's the not present be a to and in active to cap buy that to local would or both time potentially boon and them. strategic I potential here be shortly VIE of under some would the the some submitting ongoing in And swaps And in agencies. on next portfolio have. market counterparty so, be up with national year we regulatory of multiple our sidecar our the to companies value allowed will will also have That's discussions double opportunity marginal us which itself couple throughout one arrangements first but had years. some efficiency will over over through

opportunities this ownership this that from and amount today. weeks sit that seen, seen industry opportunities. couple cap haven't those in with to think on the discussions has deregulatory both frankly expansion local as we're first mean, multiple working legislative we quite a which ownership of yet, but activity, national to here a I in set political engaged the we and we're comments transactions be standpoint real-time filing I show of with we traditionally some for maybe The counterparties of and happen, number So, the but we'll then fronts. next need

Barton Crockett

bit a picture. I switch And fundamentals, bigger Okay. then just if the could on That's great. little

than is trends bulk Netflix you news on and content, I viewership the of think be maybe value, thing better by the large the economic influenced. can are that local less they the which and that's of are battling the that have ad that means on trends broadcast business you value about networks what the station think I entertainment, your guys own really doesn't where one make driven And news portion TV interesting a news. your

kind from value current and sense local retrans how of and viewership news your contribution So, describe the trends you the advertising of of to would at both news this the point? contribution, on local kind

Perry A. Sook

argue And revenue of can affiliates about comes revenue contribution's they're viewed are broadcast revenue the and I multiple literally ad-supported our pretty news. in from arithmetic Sure. where network the can That instances average same as I stations of aggregate our our where be is number adjacent high our system but television a local XX% and half, half cable of that market, I news. from would in. the markets, the any a easy think to comes some local as on spill mean, in network and there major value significantly of on two-thirds cite

news. you being York, heavily year that so our some the now for XXX,XXX invested I'm our in to value can why from of obviously content that paid and And and contribution we proposition local it's same hours systems, than, yet of perhaps be drives is is go ABC, about you key and my think our New retrans, greater a we which to equal local can in what news the network expanding value to the Pennsylvania, content case Wilkes-Barre/Scranton, And in for from local across is those of NBC, for have all to, content CBS content markets. same our or systems – get on the Eastern the Philadelphia local

Barton Crockett

primetime viewership than But or on stable news not the would is local that you say entertainment?

Perry A. Sook

Yes.

I think period there it in choices are is time a much for more sticky news proposition, particularly the competing in operations. where medium-size local fewer literally markets

times, between delivered whether audience deliver it's late of share higher Champaign, or or than a of in share or Illinois many news, rates audience Pennsylvania at we'll the we news network XX:XX our local deliver any X:XX, local unit Erie, higher we that on higher late we'll multiple So, zone, and in lead-in in a a and our do time deliver markets a rating, be in depending primetime.

saw sticky last, programming and I Nielsen, down to is about or the video but stream three aggregate So, in local is two think few programming in XX% in our a feels where us about years, news product ratings down but entertainment local market We right probably to proving entertainment more ratings in call more over news, showed that don't I X.X%. a it, to study be. more aggregate about every fragmented competitive, than that the is lot subscribe

Barton Crockett

you. That's great. Thank

Operator

next Ryvicker Our Please Fargo. from question from comes Marci go ahead. Wells

Marci L. Ryvicker

Hi. Thanks.

I clarify Just today. a QX the you Does know distracted slightly to if question. And am don't Olympic I sorry. Olympics first or commentary, number. We're the to up. And the provided underlying flat that that's exclude little include Olympics? an

second XXXX XXXX? cadence The growth retrans at you versus talk as of look your XXXX we versus question, net the maybe can about

Perry A. Sook

go example slightly up double Sure. affiliates be if digits before if Core where NBC illustrative to rest Olympics and the you the the through of gave up the includes is I flat portfolio you – will flat.

show QX. Just up a the to slightly math flat would

at digital our again, retrans. revenue, this point and of core is and comes XX% from So, XX%

is it's so Political the so, in so of as one political expectations, retrans, things as a digital. of think year. we ahead And about

four So, sources. slowest Tom, to a retrans I'll to continues multiple be revenue revenues cadence core business the let, in the line that growth. growing of speak all of contributing is

Thomas E. Carter

of affecting at reprice. our subscribers Sure. XXXX, we therefore Marci, XXXX year-end we X% have approximately

were were XX-plus at one XX% of number that XXXX. At XXXX, at that subscribers is large of we've end renewing substantial actually then the or one a rates up year-end of There's So, rather. percentage and approximately XXXX, Obviously, contracts new included. – means during something got subscribers. our their percent mid-XXXX

of So, driving the particular. that's kind in cadence that's retrans XXXX what's in and

Marci L. Ryvicker

in And I'm getting still retrans the Okay. asked about revenue absolute. sequential then

those it I QX million, was QX get I million, was looks I'm think hoping QX like right. $XXX million, $XXX numbers was $XXX

a a true is step there from up QX concern So, that QX. or QX that of Was up? brought the there number in down anything to

Thomas E. Carter

of we're in we an but money was million. real Slightly, It was the QX. Perry decline recognized down than less in mentioned, QX, in less $X recognize small than or basis answer X% was products didn't – a we QX amount were annualized subscribers OTT not the as on because from the

will fourth So, XXXX. rest in replacement QX traditional be to QX results the there's quarter, churn of any to no MVPDs on assured in relative retrans quarter but relative up any and

Marci L. Ryvicker

Okay. I'm you restrictions squeezing do buybacks your debt or for one in What have payments on last in. restricted XXXX? covenants

Perry A. Sook

once effect, basically is other the then $XXX our RP. documents, the be RP once tightest financial deliver in no the excess That's RP quarter, total about million days. in in will and unlimited I That Well, than remember, in And statements. of that becomes three have a have I said that, deliver financial this, to in do longer the job But an public it X in basket the we also the it's is statements bank one. leverage deal. and we've basket goes times below

Marci L. Ryvicker

Wonderful. Thank you.

Operator

from Leo Kulp from RBC Markets. ahead. Please comes question next Our go Capital

Leo Kulp

morning. Good you. Thank

sort you Just free pro political remind and forma us around – what was your in can guide? you your into XXXX? have political expectations of cash what revenue core And baked

Thomas E. Carter

was – pro million. north we're The on Sure. and million, was – revenue mid-$XXXs somewhere in $XXX or of in expecting the XXXX forma XXXX political somewhere and revenue

Leo Kulp

Got other it. one question. then Thank And you, Tom.

see tax to have in interest any passage of pickup stations? sellers started from potential you the With of reform,

Perry A. Sook

is only owner as selling. the tax an are one say – interest ongoing. probably specifically that shown station has now to would conversations I those related inbound in There's reform single Well, an owner call

it. sample a small say it's have would seen I So, but yes, size, we

Leo Kulp

you. Thank Got it.

Operator

Evans Our next Kyle comes go from Please from Stephens. question ahead.

Kyle Evans

And capital your Hey. activity times high give returns? I the then X two end commentary. to the help and high wasn't about have for year. of mid qualifiers a Thanks. the strategic is release your discretionary in which word quarter third the us some that you have you think Can The follow-ups. release, leverage In in target you

Thomas E. Carter

say to higher projected high what mid Kyle, we I a anything, reflection really rate a interest environment What is than had so XXXX. would more the than in in is

that free average to take $X.XX doesn't two-year and really free per and cycle activity. or a down mid that doesn't result cash But debt cycle, and any reflect Xs leverage. times think of meaningful flow, that pay the anywhere flow, If about you be that in $X.XX of higher go could the could share from multiply cash to high over two-year – obviously, to slightly therefore requires strategic it

Kyle Evans

you. Got

any this NBC I at end CBS the the at some kind of renewals, on end and CBS many think this year of view of time? and have early How some affiliate year. very You

Perry A. Sook

NBC. any have don't We

with NBC another All those for we out of our in – renew did a NBC all quarter years. several deal expirations fourth of the to

affiliates the We that were have are in agreements primarily renewal the that We first already XXXX. up Nexstar CBS at this affiliation half of of up are of renewed a our which do the three CBS slug year. legacy have end for

Kyle Evans

you. Got

and be embedded in your we it's Thank guide? in the expense And you. You synergy as Is about how incrementally mentioned fourth station targets coming SG&A above anything on XXXX MEG. should direct new? thinking in that's quarter there

Thomas E. Carter

the Well, if amount synergies or of SG&A that. asking about direct say be any happened. on the would station, will station expense biggest synergies included you're in I that's the

embedded to had we of gets before our $X million flow think there's that's of people in think take-outs terms told potential cost all and million in cash $X additional we that free I guidance.

Kyle Evans

you. Thank

Operator

question Griffin ahead. comes Deutsche go from Clay next Bank. from Our Please

Clay Griffin

morning. Good Hi.

Just agreement. a question on the new OTT

guys anything the you versus ad distribution? equation the on for inventory So, is side there traditional unique of

Perry A. Sook

where we're of is preserved point a so But us concept, taken that capability none hard network it's the this the are them yet insertion now, could We just ad it's one to in factor preserve not concept. At AI. Right would point, to have these become long But we future. actually have have in and ability – our that point. because that this reasons agreements, the these at the actuate in negotiated a to get which optionality negotiated the partners dynamic of it's we long a agreements. to

Clay Griffin

cetera? follow-up with opportunity to so, to directly a And targeting, to that, as I an utilize the platforms is there work guess, et

Perry A. Sook

those several that transaction are there's of much. financially just the have would party it perception the frankly, the discussions sync, of along the not lucrative be opportunity, just been The found brings in value that each and and we counterparty a too Quite The not always revenue we've had to us. points sharing to Yeah. for be way. at requested

make So, sense. there actionable financially would deal for a that opportunity exists today, but or not accretive has us been that

Clay Griffin

Thanks for Great. Okay. the color.

Operator

Our next question Barrington Research. comes Jim from Goss from

James Charles Goss

your national ad what potentially I stability I the would current partnership. so, (XX:XX) have if or Difficulty] pointed create always – comp aspects I ad for question which your will with matching the great cost or can revenue overall other revenues not so that you those Univision category. include more growth from imagine, you up services assume continue, may I X.X of and I'm future, reversed the local retrans, whether and – [Technical be wondering, come that's One you've or retrans percent is would in on revenues. exceeding in is without mix? that point And of if digital, out, may to the wonder from then, as element with Sinclair, would And ATSC more with you and as biggest you in comment and overall well. disparity expect

Thomas E. Carter

Sure.

of our very the think net to expect think XXXX, say to margin it renewals we've XX% of of retrans I we XX%, through As net want consistent for we about and north the to that including margin, be north future. you in with be to way, just foreseeable that expect if regard it what our been retrans end all we mentioned, of Perry the

So that XXXX. XXXX and includes

James Charles Goss

Okay.

Perry A. Sook

we revenue finish end revenue the revenue largest of right. those this growth revenue the and rates top-line. core was the billion on than of of be television total could on revenue plumbing $X.X for presence that which shy revenue the and of ascribed opportunities Yeah, on it line fee retrans Jim. build addition opportunity of focus be and year and our SMB area ATSC and a tech that on that a ecosystem. digital focus through OTT, Greg the an through that of to suite to local. XXXX is just and other company the $X contribution exploitable through P&L the advertising surpasses terms digital retrans is became users SMBs to with the our subsidiary, entire and can focus the that Raifman full focus the we but SMBs area company, revenue continue year-end services you're billion well allow growth all ad ad And provide about in streams, at greater also can of the us to think and to the opportunity, actionable by each for Digital company very that growth And the retrans of in in revenue is both to looking of a decade focus where there on market,

you now. highly are areas the correct that So, those that right are we're focused

James Charles Goss

own addition, this facilitator some have is P&L lastly, these own? LKQD, a of activities its of new does it on And its or

Perry A. Sook

LKQD of profitable a me what let and digital how Subsidiary, we negotiate Raifman, the accretive what it talk But question. which me is me you is, let let in its acquisition, mean, future. to Digital the here ad who's our does morning, find I let with Well, this answer sitting are about it to that space. see President Greg hard Greg and

Gregory R. Raifman

excited This team and tech were industry were for – parts potential its which its marketplace, about and thoughtful very have overall forward. the we that an approach. growth of the position of tremendous see because primarily about and LKQD. part liked It's morning, We is focused of upside company, having going driver the is of technology. patient on fact Greg it is Good video a digital management product given are everyone. opportunity opportunity, And video LKQD ad we that we industry. of We're the and the for growing for we think a the lot Nexstar properties the market scoured Raifman. We and monetizing in

James Charles Goss

right. All you. Thank

Operator

Barry comes from question from Company. ahead. Please Gabelli Lucas go next & Our

Barry L. Lucas

good Thank you and morning.

CapEx, year for you couple what's you have the the could. missed housekeeping, I the annual $XX if in of a mentioned but it, quarter rate CapEx? Tom, the was must for or Just run and that million

Thomas E. Carter

$XX the and the for $XX million quarter million year. for

Barry L. Lucas

LKQD, Do did through? just for you you And Nexstar a actually a it, coming that Thanks. have LKQD? was Did feel look or come good to customer and Great. back about? peer a of how get

Perry A. Sook

folks. call our access we going to expand website the to every as giving inventory and SMB ultimately our And well there, universe relationship to sell through as us company LKQD marketing that company Nexstar There what Barry. is attracted customer begin team to and LKQD, Yes, currently and was the his the people which the sales for literally with a opportunities marry of can our day. force to sell LKQD there, to Greg introducing of video that entire sales are into on marketing now to are sales ability two with, upside the there. and we

upside opportunities that have we multiple LKQD So, just are prove there and then with now execute. to

Barry L. Lucas

Great. and Thanks. or Last X.X. to new to any additions one any for possible, are want to there. just milestones upcoming the me. And or come color ATSC back that are I that consortium deployments

Thomas E. Carter

is Probably most we're excited Hane on John as about the new coming addition board President.

and market highest we're design to is the market to to I pay D.C., and with rather in can of road potential try to that product so Univision somebody needs begin him staff those standards is the to And hire were I discussions. next-gen the our of have help able last also we're and spectrum. management than he not current our to the but that and from And as far he then let partial use down breakfast market. hustings transition us we going every transmission kind is uses tell attention going that week only already in intelligent, a just a thinking monetization and had to now, to now full-time the organize perspective. continuous terms a think sell the from the beat Sinclair, have of So, is best thing to And tremendously the exciting opposed attention pay and day go the Nexstar to what

And transmission want an see but meeting, corporate camps process. a so standard our what's going so, headquarters I the full for and interesting we'll quarter, in And transfer first in is Sinclair become a this to don't the within consortium, based of X.X. SFN have frequency in that's Pearl participating a as on here, the and new will speak counterparts then, first market who are to out – And uniquely going in in my member have Nexstar budget market single board our or or our here Univision, be a large in to has we'll full are reality. ATSC we'll both And network. is participating in very spectrum lay that, I of build-out to the Dallas. base Samsung R&D next Phoenix of we positioned Dallas, in the begin we to both We're think at and

the horizontally Barry, monetize from just matter in in to two the that's XXXX drill and if, of to our rights. just will to is we to the to And to I've looking I monetize benefit not XXXX, hydraulically frac at efforts of throughout it's asset. have the of we a we'll our and transition. how solving gas spectrum entities – it's shale And will two material excess as and it's be figure be in different those our the knowings a experimenting ground mineral position the and the a these it's But and think, out the are said, This So, when that both here with pieces way. company. there fact knowledge are tremendous that have a

Barry L. Lucas

for Great. color, Perry. Thanks that

Perry A. Sook

bet. You

Operator

Hebert Davis Fargo from go ahead. Securities. Wells Our next question from Please comes

James Davis Hebert

Hi. Good morning. squeezing in. Thanks for me

then do nicely given year. contract, Just of couple like feel sports that profile this And bit Fox through? terms to ones. football continue programming about to M&A second little any that you of question, you in and a leverage there's pass more down to The go coming costs Fox a and new quick higher, of read-through talked your trying just you

you talk what Just, I terms in debt about you. look further your could wonder M&A. Tom, you capacity of for Thank if at

Perry A. Sook

to speak speak the I'll Well, can to Tom capacity. and Fox debt

bite additional be investment already for think of And that I affiliates, believe value a value Thursday I And so is say, I it, read-through, that that made at a regarding network weeks creating that, it's the you in programming think slouch and it any to years. long-term there'll XX only on in I value extract as programming not and taken Fox affiliates. the Night five for in be don't Fox will kind for no consistent, from but apple. their the they've think think for smart agreement. the Fox in value and builds do builds but relationship good attempting

as a our positive part net Fox speak let the that portfolio. So, for of I'll we see affiliate our to Tom debt capacity.

Thomas E. Carter

on obviously below end Sure. X trailing political Well, well be That year. a revenue. times XX-month by this obviously, basis, we think of we'll includes, the

MEG we just X.X that finer a the in, with interest year, fact I and approximately you times that higher have to actions end combined to and to at the is the rates, an on of hearken we're years. as opposed would but each point the That, an obviously next transaction, of fed I factored XX two the that think odd multiple in an put So, market even end factoring just that, up say was of back expecting if to leveraged trailing we year. months,

actions six would seven in see next which free over flow from two-year which you result or cash period affects anywhere fed four – the higher LIBOR could guidance. our to So, or trans

handle debt cost up, go The debt of of the same down. will can is say of more. debt the cost amount to therefore basis and All will that the that will that on we go

most All probably of to our combines I accretive level that a from is for say only say XXXX, transformative the transactions. and end leverage X covenant around the is would somewhere of that the But – and that perspective at in most of – times. comfort

James Davis Hebert

guys. Thanks, Understood.

Operator

from go Please question ahead. next comes Noble Our from Markets. Capital Kupinski Michael

Michael A. Kupinski

advertisers some years, advertising? sort normalized XX% back anomaly question. it just back up national can kind fourth was fourth advertising. advertising. taking was been the in fourth national thought. of XXXX the was the like national trended Thank me wondering of coming Are Are the I question quarter, as platform? quarter. It My stronger And, In programmatic there percent larger on color the think, I just quarter. give seemed had last a go core national if several in in if relates of And I to XX%-plus And to you XX% year attract some of to efforts you levels. like little was for or than possibly national there has And of it it station like Is from a core. more was core embracing you quarter?

Thomas E. Carter

XXXX, Well, think was but XXXX create part local And, that Yeah. out X.X% that. point reported. it's that's had data think, political because we back out why be a in of as would up in the station $XX rate-sensitive. up that a and on basis Core most it's I the anomaly revenue of somewhat of we crowded in national and particularly I quarter flowed that not to instructive obviously, fourth was of national a as a the million because, try quarter particular same

that core a just displacement by on the really political in So, of to revenue and back national. basis X.X% the grow allowed now it's which cycle station and quarter, I includes think inventory the having same

Michael A. Kupinski

in national just on here, with might But to if even even into XXXX know trying handle XX%-plus I been an unusual fourth of quarter get was might years, you go what the I year, was in political. a national? the but the core be back political movement have

Thomas E. Carter

past, XXXX see from in we the of perspective, as the stronger for both just our anticipation local core the longer-term beyond. still the think two as I a of and components recent projections well as and

Michael A. Kupinski

Got you.

Perry A. Sook

element but one partners We're attribute develop to think develop of TEGNA, are in We're the QX Hearst working buying any of those of don't national hard catalysts about, all the to to to that you that founding I on with I talked programmatic frictional hard and to now a could those advertising. programmatic Sinclair, trying we're costs XXXX. working reduce

Michael A. Kupinski

you. Got you. Thank that. appreciate Greatly

Operator

time, I'd additional Perry to this At like conference or for turn back remarks. Sook to any closing the

Perry A. Sook

QX to and this XXXX be you and drivers other continued visibility support forward our will Well, you. We'll thank and to morning. back year political for results we Thanks journey and We very Media of XX revenue to joining Nexstar, us be on great much. taking the along on days about year with for of you, your look the give XXXX. a the interest report all, in Nexstar Group. continue for appreciate

Operator

today. does your for participation. conclude our for you This conference Thank

disconnect. may You

Nexstar Media (NXST) 27 Feb 182017 Q4 Earnings call transcript