NXST - Earnings call transcript Q2 2018 | Nexstar Media Group, Inc.

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Operator

Good day, everyone, and welcome to the Nexstar Media Group 2018 Second Quarter Earnings Call.

As a reminder, today's call is being recorded. And at this time, I'd like to turn the floor over to Joe Jaffoni, Nexstar Investor Relations. Please go ahead.

Joseph N. Jaffoni

Thanks, Greg. thank conference joining call. and XXXX Media everyone, quarter second morning, you Nexstar for Group's Good first Safe We'll momentarily, your but as to well review get management's as questions presentation and disclosure. Harbor and comments I'll the answers, cause unknown conference factors laws All statements results other those to and future deemed statements are of during of that meaning and be than within may subject call the in materially statements risks, fact the be made other different and or forward-looking expressed comments may the uncertainties today's and historical statements. Federal forward-looking to known Securities from implied the risks, differ and factors materially Important forward-looking Exchange that to expressed those future with in the results in other Securities and from specified statements Commission. could assumptions are cause filings Nexstar's pleasure turn your Officer, Perry call over my Chairman, and now conference to Chief to President the Sook. Executive Nexstar host, It's Please go ahead, Perry.

Perry A. Sook

Nexstar's all operating thank us Thank today I'd like you, to review second good everyone. Joe, for joining morning, record you quarter and to results. XXXX

As as portfolio. this its flow profitability our our consensus-beating and cash of revenue identify and delivered growth metrics Nexstar outlined performance another morning's continue opportunities to across to across new improve in we period release,

Officer targets deliver with flow Our per on cycle. XXXX-XXXX in us with cash free activity, Tom as result pace is higher share solidly me, morning. cash that flow share. operating our repurchase outperformance combined on for our our puts always, to Financial Chief the free And this will Carter, all

the which businesses and of of revenue $XXX our the a and for M&A, and the to and reduction of the us proven mix, free select diversifying marketing cash growth our over to those just of reduction, our relationships, be accretive free allocated from local financial are drive highlight as reduction, operating business both per our capital, quarter development our our quarter results platforms digital share allow mine effectiveness with advertising leverage initiatives complimentary to all return cash million candidates come reflect broadcast of and drivers payments acquisitions debt are content flow second and simultaneously Our Tom total we accretive aggressive solutions With and local our share a returns. we value $XX and flow, growth the that revenue together and moment. to continue second streams scale-building and million of repurchases, will return-of-capital quarterly spread and in each levered approximately dividend across to ongoing shareholder

metrics as these reflects rise with broadcast these at Reflecting television free and X.X% on XX.X%, cash posted in Looking advertising solid X.X% digital and revenue growth, flow flow a year-over-year. second record and year-over-year Nexstar factors, net second in as sequential QX results, respectively cash and growth. Nexstar's quarter revenue EBITDA XX.X% the rise well another retransmission adjusted quarter quarterly growing

to Our year-over-year posted and basis record BCF flow strong our line, free enterprise-wide on margins, adjusted cash the revenue, benefit margins, points and in pacing broadcast levels also rise to the focus free be as and midterm This year. QX we in margins net on about the a efficiency advertising continues to begin support page margin. as of up EBITDA X operating is $XXX evident cash million in improvement EBITDA release, political this in we and on year-over-year the XX% see XXX basis of point XXX operating quarterly leverage flow to from flow brought we of XX% so cash leverage

related Supreme free election and recurring revenue advent to related the growth, continue retransmission our expect over digital results from see cash issue Jobs spending, PAC markets, and betting Court advertising benefit growth in continued We Tax half Cuts as of accelerated sports new to as XXXX will of flow Act. and the process, second spending the the to the as the midterm build to Nexstar in new nomination well

local update record the second on The revenue prior an for inventory reflecting and the review more other volatility to common which offered our quarter is shares the share has revenue which So, the a million balance growth X.X%, to spot approximately over target and items cycle. excess on with and will new reduction free highlights, after reduced full revenues sheet and And we which, interest. quarter operating ad bump I'll grew advertising during meaningful second with as our as of half an results Tom national A average our of Nexstar of share quarter XX.X of go in ad for rose market the even available the we sales. cash remain record outstanding, in through for time repurchase $XXX we confident million Class in in political year. activity outstanding, offset Nexstar by active I television finances class point second in earlier, operating annual the of way that our cycle. markets, fact television is revenue board, consolidated taking first audited local our which only flow on more stock shares. XXXX by on than saw noted basis XXXX now XXXX meeting impressive Also, our spot is our a political the the Total very advantage including second quarter,

in marking market levels of improvement $XX.X quarter. revenue. continue our in aggressive a address year's and to continue markets, moment That's we second our X.X% local performer metric in an as as noted in advertisers amounted increase new application a revenue presence QX an which states we of our of share. X.X% and see streams budgets approximately television this on our best total, In for quarter to accounted XXXX. of our to over the X.X% political focus total with rose our local As ad TV reflecting second end-market the and These the spending outpaced fivefold our for to over to internal revenue, Political core Nexstar's the last about was political X.X% building reflect QX new million, ad sales Media across consensus local our increases ad ago, over million, effort QX practices quarter XXXX second $XX.X ad-supported high of local of quarter means revenue activity. estimates. ad sales political General second revenue year-over-year proven approximately for

rising from last of the we up year levels and in posted the in advertisers election Importantly, auto we've flat categories Ford candidates, percentage basis Dodge, top over to results about spending mid-teens was on the lower Jeep from four that enough that despite the strong a year, demand last Chrysler, off-record of before. and other spoken from with the PACs, offset spending remained although early cycle, seven or not

And share Carolina, During races XX a across Nexstar spending markets. TV QX, West primary and we significant garnered Indiana. Virginia, battleground primary state-wide related ad Nevada, of the in Ohio, South to were there races

stream up XX% while revenue to political spending PAC Florida significant which revenue and spending also about made QX. the is QX from carrying of our we early saw establishment booked political candidate through category, the of spending Our in By issue balance. Tennessee, and

this XXXX to our guidance first targets from and XXXX half million for Given morning, bookings between back are the $XXX of million already of a our strong political the of $XXX our outperformance in $XXX year. we and below our this the half in range internal raising year, million of

D.C. our Nexstar Over the Washington, the has in expansion last invest several both including cycles, reporting capabilities, news of capital to state our and election continued bureaus. resources and our

the in included in As and the part Nexstar by debates expanded company's Nexstar the aired since producing multi-debate this of six lead markets series stations This covering over Texas debates, Primary. which year's XXX taken the three State Tennessee. of political XXXX, have Gubernatorial highlighted coverage, series

quarter included levels. quarter revenue the renewals XXX in in seat. our marking in These us forum masked coming add our advertisers local with are of thus to for OTT local this consistent agreements these January second year produced markets, comparable General In distributors last local XXXX events an from other agreements U.S. shift certain period the expectations and United lawmakers increase the digital primary multichannel addition, Combined metric seeking communities. new coming from news with those that video other public access across period and prior-year the to with recent agreements our we over This debate to retransmission and MVPD second the our programming with half the I'll positioning ongoing for with and as profitable of in of points provide and that the operations. this media guidance, acquisition accounted providers the distribution in communities and shift were basis the embedded the and and candidates non-television local earlier digital influence revenue local remain businesses, gains the establishment upward Nexstar's engage and coverage that quarter also currently serve revenue digital local programming the consumers. year. And XXXX platforms fee offerings upside Indiana were growth of the across our partially strengthen revenues matter of revenue, markets These our subscriber XXXX reach requisite the OTT Republican rose levels and second year-over-year in X.X% advertising and markets of for reflects illustrating constituents direct States as in on that online. distribution brings second to net Senate leaders candidates. mix million issues by better in from quarter positive unprofitable XX.X% Overall, discontinued $XXX.X the digital organic for Media well LKQD, second as families and brand and important our operations events the accretive of again a local legacy

Huntsville, has To increase neutral Alabama terms of stations television week, shareholder Our our accretive forma flow to The long-term Missouri revenue pro identifying, enhance incremental our stations our for and execution our reach. in realization expanding generating record in net purchase that retransmission by last consent agreements of integration these cornerstone basis. and vein, executing record accretive, million. without total Springfield, and entered Nexstar leverage they Nexstar price unmatched result ability $XX.XX cash are in transactions, advertising free only growth in but U.S. been significantly a addition a value. into transactions on to acquire synergy and of an of will these Not of financing household definitive are aggregate and

to we So, expect X absent decline and activity capital times discretionary Nexstar's to mid-to-high year-end returns the range XXXX. by leverage to continue strategic additional

local and to contributions in their full well of plan, our accretive unparalleled our flow commitment on fourth marketing we'll and quarter, cash transactions cost service to have Nexstar's acquisitions. improvements, in optimizing value executing remained been both capital that operational our including of our on growth, the all shares, local in viewers to paying for local XXXX. structure and free success to close capital. for facets With the and organization-wide continued fundamental cash business our expected We're viewers, managing the advertisers levels results content and Given generating repurchasing dividends, of of focus and broadcasting and company's costs are we singular excellence pursuing Throughout local new disciplined see select history, elevated further growth. free flow of while additional

$XX million and $XXX During and the on renewal we the agreements repurchases, call acquisitions, let our biggest percentage of announced to delivering before of upcoming well cash recently free the the tech LKQD that debt continued visibility cash over exceeding us the and cash flow. allocated have our and reduction, for for did over election Technologies upcoming long-term in while completion the we XXXX, upcoming of funding progress months, toward of also of year-over-year XX to months We the history midterm to million excellent free the year-to-date in With $XXX dividends a With debt first the said, opportunistic me flow all on of as path or reduction, in approximately six the digital that company's share clear as right a retransmission stack. cycle Carter. million larger our Tom acquire tuck-in targets enhancement value. a the and turn of fast-growing near shareholder

Thomas E. Carter

noted QX the sheet after morning, adopted To update start our and on of statement XX/XX/XXXX, I'll Perry, and as new the points the an previously, which, Nexstar's Thanks, and some review of structure Standards revenue with good capital everybody. balance I'll Accounting guidance Board. provide effective data, guidance. start, by issued accounting a Financial income company

agency XXXX. adjusted the commission. second year-to-date and commissions digital, X, net comps quarter national local, political sales the their revenue of national, and in As we've release done morning's XXXX a the provided what This result, to net of company to similar beginning the political presents local, January out and related revenues agency also

million. a update, adopted presented another three months barter or Also, Thus, future which outside net expense the operations XX, by post-retirement other for income, no and pension certain ended from advertising recognize cost category. effective the $X.X of other In programming service year, costs plan time flow, impact don't related to accounting addition, changes we during income company's the standards free pension credits June longer past on operations These revenue from post-retirement EBITDA or of materials. barter this income flow. to other cash adjusted and company income requires X XXXX and broadcast the credit, cash of from operations, January of decreased be the or exchange plans, the was than

QX Now, the income turning statement. to

As and up a revenue, Political were million. of at driving revenue X.X% was for up Retrans revenue our advertising quarter, record quarter. $XX.X local, was up television that second the all $XXX political net to before, X.X%, Perry which mentioned was fees million X.X%. for national

are cash basis, which, up flow was XX.X% revenues million no given and comparable $XXX basis was million. up quarter. was a quarter, All EBITDA digits. were robust of on activity in during to acquisition Digital a third well, adjusted Broadcast a as million, as $XXX that $XXX cash on million, $XX months the change to last free of the XX.X% those up were obviously mid-single flow same-station the will XX second

XXXX. direct and were network in expenses station well primarily in QX which year-over-year. the as X.X%, there LKQD programming X% reflecting up quarter net trade of operating affiliation were excluding not expenses, expenses of of in of fixed ad broadcast budgeted rose Second XXXX, sales, in QX growth increase expense expenses, Same-station as

certain expense. decline in Our administrative digital our to previously reflects expenses X.X% expense SG&A corporate reclassification disclosed of

For and rate compensation XXXX, approximately year, of to post-retirement million the the other And plans the reflect expected expenses of from items, we them million, as $XX awards to of of to moved Accounting expenses overhead and to corporate $XX $XX of Non-cash part update reclassified good as the and to QX some $XX Standards stock quarter XXXX. run million Board non-operating of is out these pension of expenses for incentive them second range, was guidance million but a LKQD. of be approximately second EBITDA. million for $X million the new $X exclusive corporate non-cash Nexstar's inclusive one-time in $XX.X million well. with $XXX,XXX to comp for million our cash include $X the issuance quarter for This the recurring $XX reflecting of equity third expense relating line quarter is comp, in was corporate QX million. million that in as to $XX of quarterly

X.XX%, times at net which of leverage was balance to the Turning to Total compares QX. the key I'll as items sheet. review X/XX/XXXX. X.XX

X.XX that That X/XX a operation, which material capital even X.X. covenant Outstanding is in which $XXX approximately at X.XX XXXX. even $XX of transaction though X/XX only QX, six to million compares a at have million already compares shareholder reduction. dollars. end since to debt $X.XXX General which financial debt was again quarters or the as million Media net enhancement activities. is XXXX of closing is And net have, through we of million of approximately January versus covenant, to by reduced we covenant First-lien – allocated was We've other $X.XXX of

will B. voluntary capital our mid-to-high additional on the With we we XX-Q, range the debt to up discretionary to to – We replay flexibility additional borrowings free of first outstanding. average significant Nexstar's drive to about sub-debt the in made the to feel senior reduction million expectations significant free and in senior returns the leading of leverage applying remain a second and reduction continue net penalties, capital very to see environment. leading times capital to debt in decline X strategic subsequent absent later quarter and on flows cash year-end $XX a our the with expect Loan the in rate expect by interest we activity to file Term pace overall first-lien our cash leverage for first maturity and structure cost good of capital and you to quarter-end, payments As weighted XXXX return initiatives. without remain which during to committed debt We returns, we allocated flow rising shareholder and approximately today,

quarterly operations the our shares our amounted as $XX million million to paid by And quarter, the debt We million of cash XXnd given dividend $XX.X debt during X.XX cash million. we net million repurchase just to consecutive noted, $XX approximately quarter. use reduced $XX build and cash from which approximately outstanding. During we by

our the Perry flow million the action to in approximately record months, reduction noted half of XXXX first million enables first in shareholder six in total. in And taking of As increase to remain value. opportunistically leverage $XXX of operating return our active to $XXX including amounted and us results free capital cash

million cash $XX.X announced $XX.XX expense million the $XX.X compared $XX.X prior to interest in funded Additionally, cash LKQD to from we infrastructure $XXX million XXXX. advertising million approximately funded million hand in cash $XXX interest of million technology $XX acquisition Subsequent while year. QX in enterprise our of at million, flow. approximately QX total video at out XX, WHDF business free June expense the QX was grew digital million to and XXXX amounted recently to quarter XXXX, year-end and on KRBK $XX.X end, Technologies, acquisitions we of compared of to

$XX in million to cash interest QX, In the approximately we compared between We $XX during the expect approximately and XXXX. of XXXX. $XX of and operating cash year, in for for QX taxes of had total quarter $XXX expense taxes $XX million to of million cash in to million million in slightly QX excess XXXX

Cuts of to XXXX the taxes which $X.X million the expect benefiting Act enactment Tax Jobs corporate at station million. Nexstar was Nexstar's we related and The CapEx infrastructure, quarter $XX as the income the and approximately terms tax timely Tax station Act cash and federal from was the million, million were for of With of with XX%. in repack XX% in spectrum rate was December, totaled costs. of of reduced $XXX minimal year-end, to balance for in to relinquishment $XX.X NOLs

BAUM $X the CapEx, FCC-mandated and passage repack which nearly the as reflected provides been we've With reimbursable. fully for which repack income Act in the is in we've included RAY Through statement. of March, reimbursements, XXXX, June fully an $X our XX, million spent approximately additional costs in billion are reimbursed,

repack cash flow the flow QX any year amount an this with cash for that. manage on and to impact, million expect XXXX top additional will We CapEx approximately minimize CapEx item to $XX of be we during

Our the million QX expenses. was $XXX,XXX of impact free of inclusive cash $XXX transaction flow of onetime

such, almost approximately million quarter our $XXX was As expectation the with flow of compared recurring million. $XXX cash consensus second free

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

we'll significant profile towards we at reduction. significant have with well-staggered headway which a further maturities until expect We XXXX, debt maturity no substantial have made point

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

operation As integration, meet we in visibility for continue midterm significant execute profitable and clear communities. excellent cycle summary, our targets value free flow functions, our retransmission expected agreements of from path long-term growing assets, continued the and continues digital allocation, Nexstar XXXX to service benefit forged to current the local capital all to shareholder to political cash well we In consent our a capital and of and believe our have across of spending, have structure enhancement value. we the operations, including near the

closing of cash I'll on are Perry a concludes for we of review the over reiterating Q&A. tax such, cycle back remarks fully now over As a approximately little million, our financial annual the in guidance call. or the to That approximately share flow basis. turn free before some $XX $XXX it XXXX-XXXX per for

Perry A. Sook

across growing with to of capital execution our our you, continually service enhance our local Thank in to and to growing us enables upholding and advertisers return management Tom. to elevate the while viewers of results shareholder structures and businesses our and operating financial Nexstar's consistency value shareholders. also capital commitment the

to address Q&A to specific Now, Greg? let's interest. open the your areas call of

Operator

with And first, Jefferies. Janedis John we'll take

John Janedis

Thanks. Two me. questions Hi, for guys.

you separately, your topic. to First, large-scale market? Perry, in category in that and leverage sports when XX you see your about then And on or for the the that level, given on do portfolio? practical top accretive range? do On about hit focus reduction, potential how on like your X the it see you the the a a acquisitions the be kicking betting increasing broadcast you for value. are M&A shareholder talked potential given scale And with thinking you And further are assets

Perry A. Sook

a can significant state any investment in the it out by on not state place it. will a markets as for I'll ramping betting goes spend happen where purveyors yet category. most that see us it And may take mean, it large could it on category and by be and and over basis. activity adjacent obviously are betting the I the in category time ramping But second would will state major I already we markets John. seen by take basis, sport have part first, that local states that a think But it a roll we of become in have the approved to because state direct up. on likely

we'd allocation were spending I question it, that likely the I'll the to year, of answer Tom, capital but question. half of let, And see think more more to in and I back think perhaps handicap in this if spending evidence start XXXX. I So, leverage

Thomas E. Carter

is what sure exactly given leverage is I – transactions? guess, John, your what question question your was M&A I it wasn't our potential tolerance was?

John Janedis

of – a I rolled have it's – forward rolled there's I wondering I on given you Maybe guess I few it. going part mean, your I and that's is secondly, may just things Yeah. market for given leverage guess the currently. what maybe currently what was M&A larger-scale reduction, focus guess appetite be on the

Thomas E. Carter

the that I consolidation and to We we would the continue that to improve free debt and Well, the reduction to the would is below shareholders holders future say business bondholders can appetite so in times to flows. cash the model for participate to made exactly down strong we operate but potential not four space. pledge the post-Media of leverage General, a only

first of We going second and are are a between We of third well that the on turn our the quarters of quarter And way cash the to reduced the revenues. terms multiples of second in revenue had the to political doing quarter. by that. flow have fourth the three-tenths leverage

a So, we're to forward. see reduction debt going going turbocharging substantial of

a Given return and of the would a X around that's But say say would and it's potential number. and leverage on cash that's levels, deal-specific of probably good acquisition more actual terms just I leverage the generally, that. or level characteristics probably somewhere flow the comfort free timing times covenants in I

Perry A. Sook

because for with improvements a profile, of have de-levering to Media would with as XXXX. in Obviously, our the happy leverage substantially John, it's our path we vis-à-vis toward demonstrated are say Yes, consider acquisition, increasing we a and short again accretive term just accretive clear substantially General just in thereafter acquisition a operational synergies I acquisition.

John Janedis

Thanks, guys.

Operator

right. All

from Dan Company. Benchmark The Moving have on, we'll Kurnos

Dan L. Kurnos

Thanks. Ford. morning. questions interesting Two Great. on color around core, Perry, Good just

I comment If that you a last to could sort So, of call, into just underlying guys OTT, point you trends you talk I of have we incremental NBC there's understanding on asking on think displacement, the on core head if And focal QX, signed being also core. then, displacement? to auto in as kind you up remember just the want YouTube.

pacing there, sub-count OTT kind your renewals sub-trends you and is the if talk your expectations? sub-count coming mid-Xs. general you how about up OTT Can was in Thanks. just any think in I of of kind have

Perry A. Sook

Sure.

of core that were review and, up X were first of media, infomercials, that medical foods, a kind on furniture, home roughly were TV, and repair, of down. were We The was up which start attorneys, programming, long-form X XX%, Fast down. XX flat paid to just kind were healthcare, that all, were color service you categories that of our bit about media. Let's down that give minute. a more The were I'll had with in categories of auto, and categories and radio, and some top QX. cable, down then various other

top a So, kind of half XX typical of quarter in down our in terms up and categories. half

that influencing secular, and things that on automotive, incentives. continue the and currently to Car relates that. we specifically think you our give view are category I'll companies there are are it some situational not to spend As on

and now that XX.X% budget. marketing the incentives of of In about represent fact, vehicle comes out prices, the all

stabilize I spend ad order of end approach in we moderating those years. to back the budgets the think co-op they're as So, and

one. that that's are dealers buys we and I consolidating, So, instance, think example, hold, Group. on item in have Everett for footprint, multiple In budgets the Arkansas, in our like put have Landers that Group been

the hold for believe acquisition management as ad in months, we which until completed. changed as so their the media Most is spending their car strategies well their agencies is XXXX. impacted on executive have And past XX companies

a on of a So color that's QX. bit

is only I pacing I the on to of ahead in our automotive QX will utilities, as ahead And this XX% potential material which to like hanging we insurance, death tariff, for QX senior are think of our we amount yet it slowed finished as attorneys, I domestic every core categories. Chrysler be cut that the pacing look estate, to have to across of hardware there will Jeep, revenue could for core ad QX, ad relates nameplates. affected on say, books. of annual repair, already and nameplates. than by all the reminder changes Dodge several seen where Other plans. business at and or is dealer that's placement Ford way. basis. pacing think it import point QX the impact OEM is so it at it other foreign with year Canadian healthcare, Dodge Asia, back home And as Fiat CEO not the pacing the due imports are our placements we as quarterly could automotive but that of finished a – their And on a categories to and lumber, Damocles, say and categories, along and we Sword better been medical entertainment, issue stalled places marketing the affect Chrysler, of think a the that's place relates automotive is of and a in real substantial relates already though, the again, buys, management that a domestic Mexican amount over advance vehicles the and

sign XXX,XXX lag as that before days on estimate platform, that see does is OTT somewhere the So, NOW core Open. affiliates helpful payment our an OTT We British From on we're and hopefully, right that the check. in counts the launch literally just now did the DIRECTV it. by Reminder XX the the as we week subs. revenue the perspective, NBC we

all now we year before on be have they where markets sub-counts the no the but for the the believe we trends sub-count end have we it yet in services, all will are likely of launched. So, those data

that's responsive your hopefully, to questions. So,

Dan L. Kurnos

Very much so. Perry. Thanks,

Operator

Bank, Deutsche have we Next from Watts. Aaron

Aaron L. Watts

the process government? all M&A transactions on opportunities, DOJ Sinclair-Tribune approved think FCC getting of Bigger-picture your Appreciate the and the Hey, by guys. scale has altered color. question, of as likelihood you view the with Thanks. about the

Perry A. Sook

I don't plan very that believe had to so, we Media General. the we given when a acquired agencies definitive clear regulatory through

would same I large to rigor we apply scale. that discipline think other and any

next our that, is to is asking week M&A the read-through a don't questions. that and general same this Our that in, of opinion Sinclair-Tribune a process a of be your I the arose some opinion FCC both think and Having trend. at situations that that I'll the Washington there's process. specific just said DOJ the and number are it's in And

Aaron L. Watts

more color near maybe way or view your Fair XX% the in also, to over enough. caps, that term? but ownership week, is And cap the another still move still I'll on is this the next one get it likely

Perry A. Sook

proposed Yes. coupled will be FCC a will increase the the UHF Ownership be elimination National will think some be discount. think that we an of Cap increase with that it the at We in there point this And by fall. substantial the

done you all that from the one elimination XX% that some the to number are is another. As is only industries you the a will arbitrary the be with replace unregulated all to arbitrary it judicial of the businesses media other likely and number, and know, us that with position total primarily on country. compete reaching business allow raise not digital doing capped answer side And of review you've of or space, in in cap only our if to survive would XX%

speculate will FCC we ultimately end to ultimately up position the the courts soon that. us ends that's continue too the on think up, to I where and it's advocate. for So And

Aaron L. Watts

helpful. Thanks. That's Okay.

Operator

Stephens, from have Kyle we Evans. Next,

Kyle Evans

Hi. Thanks. is and more duopoly into there comes you've much got footprint you today? your Huntsville. XX% just Springfield the of opportunity duopoly station revenue How from markets today announced

Perry A. Sook

doubled XXX XX now up we're of in Well, our markets.

create for third a market a opportunity our duopoly. theory, in the So, of footprint would

markets an be singleton those just so dance a there's not Now, structure. opportunity or where larger to there suffice-it-to-say, actionable. markets some concentration, those the in will But willing margin increase not ongoing market revenue may have conversations two in undue of streams all be by would, DOJ's eyes, revenue it partner, a we station we single off provide an an share in marketplace, of fixed create a any see market the a in if there's running only to where cost and have XX

scenario So, might that look a vertically be. opportunistically be we taking our whatever as will from cap we have of under as new where expand, lead kind to continues national to well capacity what would

Kyle Evans

year. digital you little bit mind on how discontinued well, a line please? the Could performing, minute as know specifically there's you about there, LKQD talk spending do from I Tom, a unpacking Thanks. is that prior some

Thomas E. Carter

XXXX, first the with number performance. expectations is digital in LKQD materially we're No. quarter profitable, amount second calculating you're But federated happy dedicated our half terms numbers the the LKQD. there XXXX, meeting right, of Sure. so very QX It is included of shuttered the of revenue. and comparable from and from businesses were revenue in in that growth number that those excluded is so in XXXX was non-recurring the operating

Kyle Evans

longer some in we metric is How inning practices revenue Got in what terms Nexstar you. of And the full How tail much on TV synergy in there? applying General getting – markets. are alluded Media terms new that progress much lastly, pie? to to of in, the you

Perry A. Sook

indoctrinating with you and it's on through continued terms others, that a literally potential spreading of markets legacy as well all quicker regional for his Well, core think some markets the are non-political us basis, to Tim And, to probably as sure gospel perform weekly a little B, be we'll management, and continuing those be presidents back those XXX the expectations. A, inventory going the to vice I to it XXXX, have be our But you'll that we're Busch in-focus. year, going into business looking a get have when displacements. sales grow a in politicians in a to. of markets and claim that our revenue being continual are of sales than making process. so and effort increasingly in any absence laying practices development see won't that is

visibility and we is develop call. talk GMs piece your So, a to of business. we quickest every markets. because that's of of in way XXX competitors mandate overall, tell market communications company the obviously, local grow our piece a the give how share have is our the of share it we quarterly to on don't That's kind that it important business every time, all with to in speak that And day a your

Kyle Evans

you. Thank Great.

Operator

Okay.

on, from we Markets. Kulp Capital have RBC Leo Moving

Leo Kulp

morning. Good Hi.

what type really how like? it about target doing financial is there Is a would So, first about look targeting, further that just particular of when ideal market think M&A, the And question, think about do you impact? you're you I... of the station or size or

Perry A. Sook

that the say, and the we things deal first XX% could we UHF acquire is would – Cox There gravitate the going accretive discount. rules potentially foremost. the towards most yes, be cap current situational today to deal under and under are be with I

environment it's that would – So, regulatory But affiliates. today's that tomorrow The obviously most have in change could have deal, so, the or effect CW October accretive we obvious certainty environment. or but in September (XX:XX).

to that opportunity and opportunity, affiliates. bang shareholders. the for would NBC, and one accretion returns CBS is and in Money biggest is we gravitate ABC, have buck We of Fox our the terms money the to

Leo Kulp

too? from strategic four Got Thank for non-big that that. just XX owning, stations is or markets, it. And you benefit accretion in a say, see do top you real about

Perry A. Sook

is who say there, installed positive It's I about great we local in job Tim an done well his mean, the to amount flow. local. done – be would now used have accretion. team KRON more do with cash news. with San out an manager Francisco. station that flow great eight-digit I of we general and And what eight-digit new has a a increased making job. that cash We've a And of negative Tim

country T fully years again, spectrum spectrum can to our be or business, we business television and for markets in creating attractive. be if Fox want so, business. only believe spectrum be plus in footprint going larger our be but you before to wouldn't our value we a a my existed X again more before lever even is we that our And larger then – XX spectrum we independent as that assets, And and the monetize X believe monetization that of next industry across say monetization. do primary would I years that good career to I or started the is

thing one us and deal would ours. in for vernacular be on on would But front certainly most would act purposes. its that it in in be be we spectrum not of might the the stand that's that everybody's own just opportunity accretive to have So before

Leo Kulp

that. doing investor? an or it Would a transformational financial question, would capacity outside bring you appreciate last do on – deal And to your the you in you do I on do to own? need prefer have how do Okay. then you it about think

Thomas E. Carter

specific, We're specificity not You and know, situational than the – excluding very all any can't asking that's a most all more accretive or or do that's question answer but hypothetical that. very I for and opportunities, our we'll any you're shareholders. really including thing

Leo Kulp

All right. Thank you both.

Operator

Riley. from Next, Crockett B. we have Barton

Barton Crockett

there's your obvious, that there's sector. relatively of because been this. is, kind And station the like potential around taking tell But and more I of of for that when so equity you some, things. Thanks about years. interest interest private contemplate past Are being renewed environment and may I'll the describe this of of active current less for Nexstar you talk stations some in credit the then you that generally and generally was that active again? for very a recent in question. a I been ask for the there kind guess about capacity in know your TV the view have private you background kind current kind and Okay. have the given equity couple a guys can sensing One may of And space private TV in me maybe private and in suitability versus public? the unattractiveness attractiveness debt? being recently I would you of markets company a view to interested be How appetite in years large what history, equity this know

Perry A. Sook

any something Well, sector. having is start the a there's that raised the paid that most so. years create equity sponsor us best estimates and, necessarily of I the mean with could given on would necessarily a a chapter home, and I sector the financing private our our read. that been that existence. of in others. don't business We pretty We've cash I the creation. for in is company's a a the other for playbook, to that, quickly. for value think, whose so it were we it calls seven ability would with equity, private sector prior interest for the seems of a we on balance as first to first high to decision free and do it go equity think, if only private Barton, sheet money to more you we've would be Having $X to And and equity it stout mean, private in if think tailor-made consider. our got we and or shareholders, the depending valuable would we mechanism then be said There's and see margins trillion flow That a high to private highly said equity capacity delever looking were

only I can the interest at put period the a that in if you reason of were So, it end of our sentence. that the And is think best shareholders. we do would

Barton Crockett

follow-up idea going little this away could private on if I bit as currency? take Well, stock that with in acquisition is be it a a given would environment, bad that

Perry A. Sook

I think have you'd to me. tell

that a think here. as mean, you all cash. as obviously, what I to I ask drive There stock. public it private idea. just that not price any are our in me decision tell There company will but then may well stock a that was LKQD can don't have are want bad base at whether would give shareholder or and can you good be want one. You'd It people idea people a

willing get it came public our purely think someone been our company, made were it for to premium what on that chance would to generate that's basis that ever on – the the will a if I in we is significant in a shareholders as the a obviously best shareholders. to of what then vote be standalone to shareholders point. markets able the have pay of interest And to if

said that thought I about really Tom and are hypothetical beyond questions, they're we've that, kind at of this So and point. things mean, these not theoretical earlier, as

Barton Crockett

assume business came thing sidecar I I'm do that Or a as deceptive just were one gears, that Is switching Sinclair friendly you arrangements that Sinclair's to with. I a or if generally do suggesting Sinclair? FCC they'd then sidecar, One specific would question, that was you pushback with you just describe wondering, on sidecar think arrangements. be on And in the makes And relationship so they FCC you anything other because I it's I with maybe And someone of could. and that? out problematic? pushback say some that some essentially the there longstanding working had problems of Okay. if think what that are

broader curious just any there's come think in that you if I'm the the issue way has down. FCC So,

Perry A. Sook

VIE all to a earlier would specific the I'll think that transaction I I of don't inferences that think tell my are any go of I Sinclair-Tribune back marketplace. statement in that or term, sidecar we industry, to the have broadcaster use been that experience that arrangements, and – you XXXX, obviously. those that broadcasters if have with want in our that to and veteran – to first so are transaction. one did coming broader out we there's you read-through our believe

I anticipate time. and not speaking to that So, you're that commentary issues the has read-through don't we of probably had they think is sidecar any to market. the the relationships and plenty our review of the FCC around pass to broader inspection for time And deal-specific any long and and we've them, a a been with believe

Barton Crockett

very you Thank great. much. That's Okay.

Operator

Griffin have we from Bank. next And Deutsche Clay

Clay Griffin

Hi. Good morning.

should that for expenses wonder and opportunities for OpEx, I that are rate you think revisit we just if So, run the Tom, question. think but over curious you and at thank perhaps corporate non-programming I taking for could further there you next what efficiency level, mentioned the quarters? of kind your the just how higher about a in

Thomas E. Carter

non-programming. you speaking Are corporate? specifically efficiencies other in to When say you

Clay Griffin

gains kind of just guys station kind there? further might have efficiency just non-programming expenses, just corporate the opportunity of SG&A for you Well,

Thomas E. Carter

Sure. I time. the all are there mean, Absolutely.

long real Media General. estate on post are We

and the at and chip ongoing, side, only we on perspective, exit automating been a station estate or think not real in monetize taking away basis. you'll wherever master Those order we Clearly, hub the traffic that us, from also to and leased perspective control to on possible a an to we're business but also reduce I see action annual level at have projects etcetera. from inventory are costs.

towel opportunities to up much there's yes, it's that us as can. and wring there, So, to plenty of as we

is generate in in Some capital some and order continual require technology, of to but process. of in of that all efficiencies, place put to order those ongoing a does that

Clay Griffin

folks as to in-market you greater over other Great. asked your cap Initiative the then achieve the think has And a have collaboration opportunities opportunities we and last on progressing quarter and others if about then – from curious follow-on changed And XX like about here? view as consolidation TIP I'm the the how see or days. about scale, just

Thomas E. Carter

obviously the we've to regard last on that With executed XX in-market, Sure. days. in

line. get time, Those those take there and take those just We time to out our accretive. to more a the finish opportunities wish massively finish little the obviously Some over some were that in hand-holding but exist, get there. they larger little them media view do to line, but opportunities are of a

Clay Griffin

Thanks the for time. Great.

Operator

right. All

Next, with Fargo. have Ryvicker we Wells Marci

Marci L. Ryvicker

I want you. guess follow-up bunch a on another, of I Thank to questions.

is to transaction, If deal a know with, times. to levered large MEG do that? you're I you were up about it you level for Is something the X.X comfortable that below the or

Thomas E. Carter

the a debt to specific number now is less it appetite it's than all I Generally, deleverage put Marci, our down. we every transaction probably before. get different. cost it's debt therefore with back terms and difficult regard higher, before But we quickly did MEG trying the Like, said of was of for that deal-specific transaction, is because is in can I say since how to would on marginally

Marci L. Ryvicker

that their up would second comment sentiment? be a that that the Nexstar most should first still Tribune and because to And you that look natural the for sale not Okay. in thought marketplace on Tribune consummate took there Can out there's look. take a a buyer deal, Sinclair may you be and

Perry A. Sook

that Nexstar's than at as term. we near say other And supply been or in you to this supply would there. the I history, opportunities tell open No, our in point that to discussed hasn't that are much the retreat week, probably board wide out last there eyes our potential are

of the to company. And interest so, that's

a are consolidator. We

shareholders makes continue to our to the attempt operation and will for and We grow are sense financial and it where dramatic. sense synergies

that everything. more what So, accretive inside means that than bright transact we paid kind we're can a if do. that's it's to we from we buying And of stock, line have our of look back walkaway and and at everything, price

entities So, I think that on have we the which it's of to the on the anything of involved this how what at. plays and and that's specifically look could time. contingent plays because for liabilities out But is hypothetical it downstream comment to with legal not see those what that in point and will as situation situation out timeframe all us

Marci L. Ryvicker

the Okay. And only I a guide. know the fundamentals. one about XXXX-XXXX of expectation guide? that Tom, on in remember if cash you're underlying question free flow then, last companies is to And, you talked I is core cash give what for flow can't free

Thomas E. Carter

Flat to slightly. up

Marci L. Ryvicker

you. Thank Okay.

Thomas E. Carter

But increased. that on a now was number also been has political which based

Marci L. Ryvicker

So, lower affected, be be that, correct? for it XXXX but XXXX than would it wouldn't

Thomas E. Carter

really XXXX – not is important. Well, that political

Marci L. Ryvicker

Right.

Thank you. Okay.

Perry A. Sook

in the that in that that Marci Yeah. I was political guide announced would two guide point original just were not week, this the out the acquisitions were last and announced morning. increase the

Marci L. Ryvicker

Got it.

Operator

ISI. Evercore with Joyce have we David Moving on,

David Joyce

on questions A digital advertising. Thank of targeted and couple you.

the on from allocating from – can if First, are digital? other digital spending side, digital or platforms you the share taking if who digital discern it into is you're advertisers new

Perry A. Sook

platforms today. know we're that from it other much don't so I taking

sellers navigate our as we help SMBs that be morass our Although the our through our sales local opportunity. business, can and perhaps to build of local our to vision would this local be identity concierge people allow is digital tiebreaker the brand that

frankly, think digital over several going come growth in local newspaper from, either forward. So, a increased is our I will that would spend that years. lot of an to past that digital we do it opportunity be or is allocated say our from sites has the

David Joyce

if X.X you've been there, And along Thanks. the earlier those learnings just as to is an two an question strategy maybe there is on any any markets? adjustments in second update ATSC (XX:XX) could you moving new provide

Perry A. Sook

No, it's obviously very early days.

happen beginning. market will We the happened have Network full first American the Dallas, And, hasn't X.X year. for in build-out Phoenix in be just the as are It of partner, That Tower with those agreed with yet. later a lighthouse SFN to that this here, conversion.

of So, of And We're and the those. Pearl running are will both time. would say will in nothing consortium and Spectrum come only kind to that. test, early Jenkins, the of yet. both all I the of and our we the stages navigating lead transition both. really the of up Brett learnings is in consortium learning and We're the our which out that's all in group the all CTO, the representation there's represented

have best has but Dallas learnings X.X transitions as develop. both So, ongoing, built it's not things yet. they ways think out have been Those has I Phoenix again, still will of to out And, of we go. the fully highest a if transitioned those and as we are or

David Joyce

Okay. Thank you.

Operator

And next Goss. have from Barrington Research, Jim we

James Charles Goss

Thanks. Perry, issues regulatory D.C., given that better or defined, is that you're become headed are expecting still that the process? vague you about are to to in be and or

Perry A. Sook

likely in think change a the propose elimination. to that total Jim, the that and what blowback increase Step, that is is, from kind Texas I regardless or change of Well, agencies special regulatory point interest whether groups will it's predictable a be of it's Two cap there going

an on think XX% – end occurred UHF occurred. I jurisprudence creating a Pai hopefully that things in some deregulate Chairman prevail. the momentum it often, courts give I today, and will So, it technicality up it the of here. But these And the additional was effective cap still while would to affirmation think discount,

market. the in local we're So, a DOJ, ad and to total of broadcast ad And that that television local spend I with we'll, think be issue obviously, and marketplace. of discussion XX% about make case of other the as to spend topics percentage the the with total is hopeful

concentration is And sure are because underlying how an the is undue these time XX% video see regulation. so, of obviously is which replaceable, at of in anything could not anyone video, and DOJ point sources I'm tenet this

are XX% that So, is out. FCC But FCC I know and substantive we'll does. more action anything will things see I belief. than and and make case think That's more anybody kind our that where don't do elections, a take again, I to next believe so. out. But trying will before the Ownership make but else we'll Cap proposal of as conversations year to It after the some be do the have eliminate National that's But believe that action just the part my before of discount go. see year that I to understand there in increase think the is I And the from the opinion. from man's don't UHF could that one and FCC review. roll item year

James Charles Goss

you any until the trigger thing the of settle you the sort do and in are wait pull inclined just to wait what just happens? sort you continue of based you also acquisitions? regulatory Or you before will that scenes Do negotiations behind dust happen on – until the assume

Perry A. Sook

waiting Yeah, anything. we're really not for

potential But for opportunity to on As be I Nexstar we done mentioned, that there could accretive a under is have going or won't that it. is the an acquisition to rules. act particular be current acquisition

would continue our to look increase other We that national at in-market and reach. acquisitions

you at As against XX% know, change we're XX% today. about the and cap

more room the we is or with So, room then have running obviously eliminated. substantially the raised UHF in running discount cap place. And if

was in rules the think I in while accordingly any reviewed. would risk price discussion the and being we – that transaction So were

James Charles Goss

acquisitions like There's more as or thing. you of a bigger, have be better final do the in become that been to in make a so One beneficial terms case you retrans, Okay. with effectively way? general given leverage that to found have your that MEG. things size that it's you you you positioning assumption doubled you better Have or negotiating that and

Perry A. Sook

larger matters, you can outlets scale more seen doubling the in wholly-owned benefit think both horizontally, we in the company a bargain believe and have I for. incremental do vertically that And are size that and from then that of XXXX. having reach, marketplace I do

discussions partners increasingly to another, scale that an in become discussions, of networks important matters matters one in I scale with is And both scale those asset. think think more the MVPD scale as I we matters.

So incremental scale [Technical Difficulty] leverage. negotiating is (XX:XX-XX:XX)

James Charles Goss

And it's often well? as the reverse comp issue

Perry A. Sook

Never important now. know because of networks. group all but we're networks not We're for customer the an with or We're in group feel affiliate obviously, does. a two it either the control number number one we each

we And believe. important be so, it's to important

with I spirited both to parties of But negotiations. business have constructive we we the be discussions day, end good [Technical at have Difficulty] the So, (XX:XX) very have think relationships and

James Charles Goss

Thank Okay. you.

Perry A. Sook

Thank you so much.

Operator

for concludes I'd closing Mr. remarks. Sook gentlemen, turn any back right. the ladies and today. session All And that to additional question-and-answer or Perry for our floor like to

Perry A. Sook

All second XXXX. our thank nation, right. your and on And of Well, interest and of thank on us you very of behalf accomplishments much. We support look the half the forward joining today. and to your to for continuing in employees Nexstar growth X,XXX report the you for ongoing

Operator

for And conference. ladies that and joining you gentlemen, today's Thank once concludes again, us.

now may disconnect. You

Nexstar Media (NXST) 8 Aug 182018 Q2 Earnings call transcript