NXST - Earnings call transcript Q3 2018 | Nexstar Media Group, Inc.

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Operator

Good day, and welcome to Nexstar Media Group's 2018 Third Quarter Conference Call. Today's call is being recorded. I would now like to turn the conference over to Joe Jaffoni, Investor Relations. Please go ahead, sir.

Joseph N. Jaffoni

Thanks, Ebony. thank conference joining call. and XXXX Media everyone, quarter third 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, future risks, conference that and All statements to other different known are results forward-looking within subject of during the may of unknown deemed than the maybe to forward-looking call meaning or to statements uncertainties fact statements. federal – made factors be and those statements from comments cause implied and this other historical the securities in materially and laws materially expressed Important risks, filings SEC. expressed results those in future assumptions the forward-looking with cause the specified and other factors could statements differ Nexstar's from that to materially are other in the now over Chief Executive it's my call host, Chairman, turn Sook. to pleasure President conference Nexstar that, Officer, and your to With Perry Perry?

Perry A. Sook

joining a review operating you, and shareholder all good morning, everyone. to initiatives of to third value. station period flow Nexstar one across on quarter you every free Thank XXXX enhance including cash is growth flow to beating us for results our metrics what essentially recent growth another record of XX% cash Thank today consensus comparison. year-over-year discuss and Joe, Nexstar's delivered our in same

in results revenue record consent by streams, strength were and three Our driven television digital. advertising, retransmission

per result the ad for will cash of cash cycle. as guidance million year as well free of revenue bookings Nexstar prior free QX growth XXXX/XXXX XXXX in flow flow third year-to-date political and for excess annual Our quarter the robust exceeding $XXX average for – year in our

this Officer, As is always, Financial our Tom with me here Carter, morning. Chief

local $XXX that business a points highlight there few and materially have and and reach, data focus assembled we implementing value our our building continue advertisers, Through local our and growing are entertain a not and communities, complementary development grew exceptional long-term at shareholder XX% sure great allocated providing revenue they total highly of our is the increase and campaigns. of the at we foundation. and have cash leading to our are flow local positioned into influence focus to through. growth, with first we're station the technologies flow, on TMT sector the approximately to the an free that we've line. of we return standards XX% dollar to flow complete a on partners essentially retransmission content our effective in cash we're revenue. clips same on new And quarter, scale Nexstar returns, leverage what Keeping the of for transactions, of net mix. free advertisers monetize companies to operating aware XX% to Through to strategically to of $XXX flow free highlights driving year-to-date Nexstar's million we I'm to our it financial brought about in and total as get nine every And That's efficiency, net our we capital for cash a many taking decisive revenue great moment. and streams Tom free month $XXX true inform believe company, our every shareholders. reduction. to of build political delivers dividend now of to accretive trust to to of we're think commitment, review to accretive for premium Before million spread number our in capital the digital viewers, of step, that not of will over a And But leverage share and leverage are further advertising broadcast cash that drivers and reduce reduced these each million, These at revenue local share to opportunities grown also digital revenue has million to while near-term XX% that At our I our local Nexstar across details time, debt and but platform at initiatives same clear select $XXX XXXX, of diversified create unrivaled of continue M&A, the we're payments the on shareholders. our reduction value return platforms. as leverage in aggressively months that approximate the and October. only a repurchases, shareholders. we it's action flow

of the our increases Turning shares XX.X% quarter in a total now well to and driven retransmission strong spending capture in our rise advertising ability in quarter, net as growth in markets revenue by third to television double-digit digital political the significant reflects revenue, as revenues.

the quarter leverage optimization initiatives operating continued our us to through which operating our in managing now the share half operations XXXX, With the those guidance for significant raised million approximately well an Tom BCF, of XX% third of revenue strategies a interest. estimated flow we net details serve review year. year-over-year Day in this $XXX our XX.X%, XXXX in sheet will third other EBITDA, top-end to balance including go adjusted margin. for and with maximize Furthermore, respectively, Nexstar revenue political revenues, on on our consensus $XXX our on ad inventory we success and on Election budgets strong XXXX total of political in in and cash revenue reduction for local as estimates enterprise-wide improvement this spot opportunity over free offset a its same-station XX%, now revised spot the to With enabled to drove quarter opportunity. more and us, national of to increase I'm revenue a more another of and to In forecast million. growing television a local political update as record after quarter finances, our spend $XX.X of ad garnering the revenue, pleased and terms third resulted core million. metrics and we we than XX.X%, regard, generate for revenue, cash XXXX will the QX by in grew X% and cycle. record cash in to focus revenue quarter highlights, basis. Nexstar's reflected materially $XXX political Nexstar free political that political flow XX.X%, the national amounted future third in The amounts first spot again comparable metric television marked and share Our gross last quarter period, new our inventory the which That ad to resulted expectations, even more million, very now and and I'll impressive third time modest earlier behind of is flow exceed revenue, ad our internal in offer the report current new gross political year this our guidance increase midterm XXXX, did election the rose of approximately we political last quarter year's inventory reflecting of to local total, cycle. digit of which from QX In single our outpaced combined we as allocated X.X% allocated sales. accounted than over the local ad active strategy as third success XXXX spot rose X.X% an the third political ad our quarter. political advertisers XX% decline basis of of this substantial

Street everyone I Wall sales teams, where to proven supports and as applaud means dedication our operate Nexstar a and and in And effort building has We share. local we sales markets for continue which on machine managers local sales the of who differentiated as us their our see both continued commitment, nation well. our

states incentive supported in at budgets as up tenfold streams, political political Media internal million, outpaced generated we're levels is $XX.X spending reflecting dealer of Looking as advertising Political The well we spending our previous focus at seventy that from ad our of revenue from gains about optimizing local four political markets balance. of this revenue and year. group to our in to best grow the high spending activity, categories. and year-over-year core almost among on our auto, rose growth revenue the Honda, By ad General increases attributable XX% sales manufacturer the on and of of from Outside business category the Ford Street made our strategy calls with changes of significantly top XXXX revenue spot our revenue category, although QX year. enough to achieving presence accounted new-to-television overcome revenue was the not and estimates. inventory new enterprise-wide partly results from year-over-year slower approximately candidates practices, third as about our Nexstar's billing, issue positive ad is categories. spending we've Wall application quarter XX% spending, eight quarter PAC political our compensation booked and Auto former with this to Chrysler, third Jeep spoken for Dodge, television we've

years, Over to the trusted solution our platform last for Nexstar several a position continue taken to has as preferred actions candidates. and

example, produced gubernatorial and debates this resources both our dozens For senate reporting of expanded we Washington hosted including capabilities, investments races our state local in and DC bureaus. we've capital and And for and news year.

and thus candidates, brands seeking and political direct These we bring constituents Our community. local them positioning advertisers and deliver content and local allow other families businesses, as better central, the coverage important service proven resources voters local local forms engage local matter consumers. that on serve most issues our events lawmakers to reach local trusted, our inform and to to public solutions to with on other their and our markets, candidates their expanded as for through that leaders access and influence strengthened directly news a have the we communities

Nexstar our including districts and Our used federal North markets heavy and broadcast swath Nevada, platform, races, multiple by and wide spending across including Florida, dozen a Missouri, of Tennessee, Dakota digital West and battleground a Arizona. solutions candidates Indiana, were Virginia, operating

Overall, company's accretive operations. third as of shift third mix. in digital Gubernatorial we net the positive in non-television also distribution in of XX% renewals accounted and quarter total in acquisition Michigan, and with period, Florida, revenue organic Connecticut, the toss-ups digital agreements the Ohio and and year of well our our LKQD revenue On providers, portfolio positioned January ongoing and increase across retransmission advertising the viewed revenue; $XXX.X our the revenue over the and Nevada. recent Combined million year-over-year digital XXXX for growth OTT prior fee the profitable reflects again, of including states front, media quarter six XX% illustrating, MVPD Iowa, rose were the

in of re-priced consent base approximately XX% revenue the agreements base subscriber visible XX% and to beyond. this from than that's retransmission our of XXXX, continued renewed in for representing renewal we see subscriber and highly XXXX and growth be more source and With our XXXX of

terms now are consistency new we producing of being compensated. to capitalizing continued advertisers and television content levels on in our the to elevated political and original MVPD in industry continue our the of televisions the – levels subs see of which we growth subscriber opportunity, in with at levels meaningful execute business levels addition, local growth viewers, leading brands. we great summary, trust OTT to In in to service our delivering In to driving continue for markets new

capital the mid-term returns, times now to absent on the the provide are books, and expect election by fundamental to of history will leverage, Our capital Tom? cycle fourth optimizing operational our Nexstar's prepayments reduction, with we with and additional discretionary net and progress on in company's now combined and And cost payments biggest details expense the high on Tom now continue in three range focus financials. year-end structure to XXXX. our including efficiencies to activity near strategic in further growth. the further capital enterprise-wide and to long-term our improvements mid quarter, decline the and year-to-date debt management, our company's of

Thomas E. Carter

Nexstar's structure everybody. capital balance on guidance. Thanks, good and to I'll and points just update which, Perry, of data. changes statement review After provide of year. with with and of some I'll comments during sheet QX the But a first, an accounting income morning, regard start couple a our in

effective the new X/X by of guidance As XXXX, adopted accounting Accounting issued company Standards Financial Board. noted the revenue the previously

apples-to-apples adjusted the X, them morning's agency also and out January presents to commissions. quarter As year-to-date commission net political an revenues national, net national political This digital a beginning local, that and related on the get of you XXXX the sales their local, digital company result, and so basis. third provided release

income Update company the No. to EBITDA, no related we barter advertising XXXX-XX, These and or flow. Standards presented September sure the by operations than or other for Accounting costs future longer materials. net post-retirement addition, credits broadcasts impact adjusted cash be you're other In and pension which operations, Thus, respectively. $X.X Also from of the time during outside all excited requires programming was the from don't pension the service other XXXX income, expense operations. million exchange of or recognize three XX, to million, I'm income about costs January and certain XXXX, barter nine free adopted past post-retirement revenue ended that, and credits effective and these plan months a cash of decreased changes $X.X X, company's flow, from income

And, have to to I Perry up X.X% ad I'll call some in to $XXX.X X.X% income turning local specifically. their statement. to a same of that revenues local, in and XX.X%. reported again, XXXX down national, with Local X.X% station as were most of the QX digital, as up political, as out Now, Television mentioned, these $XX.X national the was and XXXX, well down Net think both which activity was and did was which $XXX core million. basis, and was revenue are results revenue, revenue million, revenue $XXX national and down which XX%. year-over-year. was was million, On exception million,

free mentioned, to Retransmission million. XX.X%. a on million, digital million. healthy to cash comparable EBITDA were were $XX.X revenues XX% fees both Perry increase. approximately a an up almost $XXX million XX.X% flow cash political and adjusted it XX.X% XXX% And basis, were revenue and XX% up $XX.X that's As a to was up up was $XXX.X of striking flow Broadcast and up

excluding growth were operating XX.X%, in reflecting acquisition, X% ad expenses increase occurred down expenses and expense in network well January rose of primarily of The year-over-year. fixed trade XXXX. Same as sales the for expenses which third budgeted quarter program broadcasting affiliation expense as the direct station LKQD expenses in net station

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

Nexstar's overhead Standards some as including activities. for was quarter million, of with reclassified under as of $X.X in non-cash a administrative well million $X.X and third adoption of million. million, Board pension was stock the million related one-time affected million $XX line. overhead be to guidance stock expectations. transaction is is which for third For an Accounting $X expense, corporate consistent quarter of we which between expense million year, Fourth to $XX corporate digital was the the expected XXXX, the expenses quarter forecasted our the quarter approximately recurring cash while $XX exclusive corporate $X.X million comp and comp, exclusive for compensation to line the that with cash comp stock $XX.X million our which $XX is recurring non-cash for This and

I to balance items September as couple Turning key the XXth. sheet, of will a of review

X.XX covenant was on X.XX of – make As QX. reduction. leverage X.XX absolute times, with was first basis of we covenant, end the debt mentioned, Perry reduction which as compares X.XX lien which to is times. great to as times, And at of the headway well the regard quantum leverage XXth net Total continue the September to a as times actual

allocated headroom And XX, in debt capital the X.XX billion January debt nearly approximately compared closed $X.X at shareholder MEG even to compares obviously that to through the of June Net transaction million QX. operation XXXX at we Thus, seven end of to reduced great as enhancement of times billion when we of September acquisition. we've billion General XXXX since initiatives. Media the and at to we've amounted $XXX have XX So, amount $X.X there. quarters total closing already a other $X by

at positioning million payments scheduled reduction see secured in our made times. XX-month our of to payments you the XX-Q, leverage well XXXX target quarter-end, to $XX period, and deliver in on $XXX the bringing October, revolver. maturities senior leverage, which now is approximately senior another the for based currently includes that XXXX. the were will revolving high-X the the which A, facilities; the Nexstar million these with Term us Loan we closed LIBOR of Term principal a new for on to The X.XX% bears secured Loan plus and outstanding total Term principal X.XX%. adjustments senior year-end LIBOR the $X.XXX maturities to million facility, – B, new periodic In repricing A pricing to voluntary its at plus leverage mid- billion secured Loan million $XXX debt, senior As five-year priced $XXX in subsequent million And same interest loan billion $X.X $XXX on of – extended

and prior to reduction in to point net compared income senior secured cash company's enhance term to free capital free essentially $X us a of free we're to very of returns annual All the in lien strategic capital interest in net to act feel Nexstar's And focus expense, WHDF-TV and refinancing range basis basis. cash million and free growth, affording to by flow to capital on approximately add this prepay to and secured capital to significant significant With on on an again $XXX on loans while annualized structure the capital expectations million to to with the for XXXX reduction debt value. good increasing of KRBK-TV and cash quarter, approximately in annual million we to flexibility to flows our We on flow weighted in facility, leverage XX flow to pace We senior a drive client overall the outstanding. debt represents additional shareholder including rate – without by the first high Xx which environment. we of revolving of up capital reduction resulting the maturities end managing interest very The actively cash credit about third borrowings touch $X (XX:XX), expect our and I'll initiatives, the this cost structure approximately highlights mid continue leading our average flexibility activity opportunities and rate and year, Nexstar's our sub-debt a we our other reduction drive amount rising first acquisitions, return senior financial – returns. a in shareholder penalties, growing cost in leverage during allocated and feel remain interest applying a committed discretionary absent of of remain the moment.

net paid we debt amounted approximately $XX million $XXX quarter, to reduced dividend, approximately which XXrd million the consecutive During by quarterly by and million, debt QX. from and our $XXX

As flow nine months, free included taking $XXX to in Perry in in total. us months, first enabling operating opportunistically enhance cash capital in results the to to and noted, million nine approximately $XXX million value. amounted leverage reduction first return of the action record of And our remain active initiatives shareholder our

television to Alabama, the in In $XX.X funded year million and LKQD addition, video the and including capital, $XX in price, the Technologies, QX of digital announced to aggregate cash we of year enterprise interest approximately $XX interest acquisitions million of two working funded of infrastructure million million QX, purchase expense total amounted technology previously to our $XX.X prior $XX.X XXXX. the business was compared million acquisition in Missouri. advertising million Huntsville, while QX, compared this expense $XX.X Springfield, million in QX $XX.X approximately

term year. $XX revolver. We million $XX expect QX, previous QX the partially approximately which expense approximately In had amount reflects the of million, of million in to to the the in taxes to $XX cash compared interest cash we loans operating and re-pricing

of (XX:XX) benefiting and Tax of enactment reduced were December Cuts year-end. in corporate XX% was at Tax the (sic) Nexstar income Jobs and to timely the minimal as XXXX, federal The the Act With rate NOLs Cuts Job was Act] Act terms from in XX%. of [Tax

station in with repack million Nexstar's programming, million, and approximate cetera, for our taxes million. $XX.X million relinquishment to – remaining of quarter $XXX spectrum which digital et $XX.X investments, the to approaching CapEx infrastructure, cash for $X.X related the platform, included expect We costs. XXXX station the something totaled spectrum

reimbursed FCC-mandated action, $XX.X approximately we Through fully cost for of CapEx, XX/XX reimbursements, we With of reimbursable. being we year-to-date. the will be which repack addition billion $XX.X repack of spent for of in the federal have passage million million, $X XXXX, our with including believe

$XX expect CapEx repack from of XXXX in CapEx. additional an approximately million QX with to We amount be

free $XXX was of of impact QX Our of a approximately $X.X onetime million, inclusive cash compares million to consensus million. $XXX.X expectation the expenses, flow of which

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

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

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

for billion which annually, on in As including a revenue, translates new growing represents taxed $XXX shares in approximately are million $XXX political approximately gross agreements basis, the or the a flow we from the fully the current expectation profitable assets, basis, per $XXX mid-term $XX digital on to annual $X.XX to million annually million continue share retransmission and two-year guidance based outstanding. we approximately two-year of cash million on our value our to the on increase for of raising and record the to free our consent $XX.XX benefit operation our million political XXXX the cycle spending, $XX basis,

capital execute well With continued shareholder some these clear to call. results, turn Nexstar for continues I'll have our review it Q&A. including all path services before to for continue to a across near functions, forged In enhancement we Perry term That financial the we and and the value. allocation, summary, local remarks the structure concludes over back long communities. now integration to capital closing operations, for of believe

Perry A. Sook

Thanks very Tom. much,

distribution the of state local engaged American serving of local broadcast of to the first been a households. why needs of rapidly voice local resilient, trusted economic and evolving perpetual television powerful very which our in and most the immeasurable. is television's is in depth has video broadcast, its central technology, has communities television be the change, industry the proven Since to in in position our contributions, broadcast an era public maintaining country, As

the Looking industry shareholders. range the for services, support new innovative of our Next-Gen content value localized to services now consumers for TV revenue other and opportunities broad and more able FCC's X.X voluntary adoption ahead, our with advertising standard businesses, the and will be our our a of ATSC bring clients innovative programming for while creating new

management our and commitment distant early the X.X leadership As various Nexstar's the shareholders. future. to strategy across significant, came and for potential the broadcasters advertisers now, enhance us X.X and fourth role shareholder return operating results our in implementation in businesses of elevate in We and in Nexstar's execution our to upholding local the of new together offerings realizing across new ATSC too such, Nexstar capital several other continually value while launch the with to the ATSC growing beginning forward standard service enables not services financial But U.S. our to to to the and and look continuing viewers broad the XXXX. in the of technology to from commit and structures, economic and the markets capital of benefits quarter strategic

On we the forward and of Nexstar a available for interest focused tested ongoing reporting down our this have growth to valuation support using create call to our you for the With up and for the proven and and us backstop. look returns through and capital tools of of more we we scale, our in us continued morning. on employees cycles. nation, and thank to Our X,XXX accomplishments including approach strategies on and We the are deleveraging and behalf joining your XXXX. than results balance are this

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

Operator

go we The question Please Dan you. Thank will with Benchmark take Company. our from Kurnos And ahead. first

Daniel L. Kurnos

solid of political Obviously, what morning. Great. is everybody results, now comes Thanks. asking Perry, Good and next. course

– you from it could QX underlying benefiting sort your just know obviously marketplace, little your the demand how core in either sub QX some initial I just or whether just on If thoughts simply positive a pent-up how bit prepared talked about the heard give then commentary. in it us you pacings, some feels assumptions, fundamentals? is improving – your remarks. on front And We've of

a You have geographic a bit different guys footprint. of

just from sub general OTT in helpful? seeing trends, would you're So, underlying Thanks. MVPD growth either trends what or be

Perry A. Sook

of Sure. Well, year talking December one obviously The pacing pace north the number of national for ahead embedded of and that to you fourth in our only on results that. with is in suppress points week core, as we're is October. is speaks political digit local million in of do $XXX That October would core political the month if ahead core, news about of of advertising where and good guidance, it November, math a political revenue our full implied the pacing quarter. double – high-single-digit well, obviously

auto. we're a because factor quarter. obviously crowd-out over in in at six We substantially look a of auto look showing you we're obviously just better first And showing being core weeks very caveat But Again, the you revenue. did out the pace. sequentially, we're XXXX, substantial quarter taking size. positive a size. the on to so, if sample the first of it's the and look of small small a seeing sample quarter half it's points October, auto for at And improvement And if extrapolation then you for quarter dozen some

with do X% subs, so paid sub that we And which been we with I month ago the OTT and August, months our number don't or in on just up actually looked were subs the of the subs. We revenue in and But was from mention six pay total made subs, total than on have by were the by look the they that sub-counts we where a would total that total up sub-count MVPD decline OTT to the report. last we has over we're approximate night, count, MVPD traditional still we markets just last at in launched incrementally paid fully than that with if more haven't everyone, added. front yet, – paid of at traditional go or Hulu more decline not minor an the so which overcome than On this subs sub-counts front. for OTT are back a months less have six populated for

Daniel L. Kurnos

Got it. Perry. Thanks,

Operator

question go with Wolfe Marci Our Please Research. come will next from Ryvicker ahead.

Marci L. Ryvicker

coming that talk know maybe have half how Great. weighted? half subs year? flows up XX% first your about more of you. Can you second retrans or it through you Is XXXX. I Thank the for in

Perry A. Sook

the half in second at majority some the it year, XXXX. of all and the will of come It's second Marci, half weighted, early year-end

Marci L. Ryvicker

can then for side reverse XXXX? And remind on us the comp you

Perry A. Sook

up of in which Fox until end our the XXXX primarily agreements. year, Nothing is the

are legacy the at process end the the year. renewals CBS that of We in Nexstar of for negotiating this affiliations expire

Thomas E. Carter

XX of the by from all that February Page network broken XX-K of has this or last February last down affiliation.

Marci L. Ryvicker

And significantly $XXX it. can going you quantify you us surpass much... to guidance free flow million are Got by then your that now that cash help how

Thomas E. Carter

really, excess reforecast XXXX. $XXX I at think $XXX during million slightly do goes my or we in all to to attempted that that. And I Well, of that of remarks. million The haven't

of is increased political benefit direct All a that guidance. from

Marci L. Ryvicker

what us what And over remind Tom, and is on Okay. can you threshold then return your M&A timeframe?

Thomas E. Carter

most can The humanly get. we

Marci L. Ryvicker

it. Got

Thomas E. Carter

back what that's an relative if the return the accretion. what's per share to filter our $XX now, $XX.XX has has – stock. flow buying everything go to on to – of XX.X% own the at cash go you everything or XX% is But the price, look through stock And

more be leverage order risk, And got but it's than that's and/or meaningful to obviously significantly that, baseline. barometer meaningful take to the of and that's so in kind the and risk execution on integration

Marci L. Ryvicker

you Thank very much. it. Got

Operator

our next And Deutsche from Bank. Aaron ahead. go with Watts we'll question take Please

Aaron L. Watts

Hey, one on. for guys. maybe, this having Thanks Perry aim me at you.

broadly what existing pipeline, it talked You as out makes assets less it how now, are Nexstar's the the current about that you're right there thinking about or available more fit portfolio? opportunities those attractive M&A about and with

Perry A. Sook

acquisitions there everything would single-station additional whole Well, the company give M&A to us from obviously is more in pipeline, considerations that marketplace. heft an

today announced to exactly of so you'll and in pipeline one and we'll the is Honolulu, mentioned. think CW where the database, I FCC is those the a current was troll FOX be And you Tom see adding that as MyNetwork our If active. portfolio, answer station

we and – but rank where stations, and there's not opportunity, are the highest get and as local content everything. opportunity, is as that stations on We the focus meaningful interesting, price for will return. do We television the can linear so television digitally, maybe believe we a can what growth

return we from we will toward our view, for get always the So, where our highest shareholders. gravitate

Thomas E. Carter

affiliation to what like, agreement because look is agreement, everything have network look And each the you individual like. looks the what agreements situational, retrans at

have then what do synergies to and potential math us the the at work of tells look We to the go. kind are where and

Aaron L. Watts

a my could on credit I for hat Okay. if Tom, And put moment here.

down brought a done the you've done job in down have You've – paying leverage. debt appreciated and I you've your

you financing think leverage levels about opportunities As any where think comfort transaction? and your how about go those them, with you do could with

Thomas E. Carter

took ever you I Aaron, way, – but There's didn't by know right. I you're and hat your off, credit that. appreciate Well, the

Aaron L. Watts

Thanks.

Thomas E. Carter

LQX quarter reason. we acquisitions it. to capacity look and a people at got to if on a get done. something of part we've in the way a does And want the (XX:XX) seasonality, think that's because aggressive the Or either on low-Xs it we've been a That's paying in significant appetite for trailing on down the basis, on very create something depending doing in debt, basis, capacity. Obviously, order four –

than ago than XX because So there's General, what significant now or there. we use But out the it capacity it'll more months in simply be Media costs less did debt so.

Aaron L. Watts

Thanks again. Great.

Operator

come will Please with David Our go question ahead. Evercore. next from Joyce

David Joyce

you. Thank

cash curious political the about free flow, and the spending. the core differential between the Just

increases, your something guidance think in cash the looking factors is with back $XX free cash and increase there guidance? that help us there the increase Thanks. were what about to on other political? we new flow that to million the political free is if are affecting the Or into So are in flow really any margin

Thomas E. Carter

it. about I don't nefarious think anything it's really too

million take Wall is – gross of million. $XXX right you basically Street now the If $XX consensus

roughly If $XX translates a midpoint, into increase political. talking you gross we're of take our $XX kind net in million about about million a That political. a

political, because an think some take that of that some and amount approximating million after-tax $XX out you of expenses we If something basis. on displacement large

probably million So keep basis pre-tax on mind, in $XX on is an after-tax basis. $XX million a

and can in easily in cash You million political free bridge net Is $XX $XX million the pre-tax between revenue flow. that gap pretty helpful?

David Joyce

It you. Thank is.

Operator

Clay next move we'll to And Bank. Deutsche Griffin with

Thomas E. Carter

there? you are Clay,

Clay Griffin

Yes. me? Can hear you

Thomas E. Carter

Yeah.

Clay Griffin

about that. Sorry

how I color relative the for for on thanks I the would a years new four want for several to say basis, ago? guess or So to helpful. on of couple pricing pricing strong station big the schedule, we've characterize renewal a years same you opportunity it's environment retrans ask, look, very period. deals, had

Perry A. Sook

half pleased rate halfway still about about of going we and the believe repriced we'll that this less ballgame very valued. we're the where zero at the XX% And – we're reprice fairly starting that increases repricing. year. and already I than through the we're We've of to with unit are

net, as and that think double-digit you'll in five score gross so another increases in far out I to as are keep you'll saying we see forecast for that the in if And years. consistent goes our see increases and the – this, way, period, double-digit which you want

broadcast we believe these that, become I the current and forecast extend and years late out. as – – local goes skinny but we these think is time on, also more valuable But channels So beyond our only more in five bundles. it'll bundles in that period

the the don't we that, grow we'll in We today. think is seek there's kind that continue beyond once of value, and have the game content see kind and magnitude anything town sports chance reach marquee people And the have will so changing. really network only there I that of landscape to to fair in for that content, chance live the out we that live a local that that of because news

we So what out, six as us. the both flow free as line the see, retrans, our that net double five, years drives can increases cash in and eyes line bottom which revenue that in digit again, think for see is increase in the top far we'll

Clay Griffin

guess, we've – alongside you a some OTA OTA is is content And do real of over I bundling I the think heard you are sense. about near talking their of cable possibility into that that MVPDs the packets, video just networks. guess, you And that something Makes about how think how essentially risk? a deeper term? integration

Perry A. Sook

I embedded been for have that. the real And there entertainment things five go to the remotes wants or to within no table to era navigate products they've coffee think of – the to information in cable on moment. to your out options. been there Well, like able boxes don't I four, back experience. anyone go and years got mean, you consumer of back be four to

So in I think the there value is bundle.

I think have subscription. from what skinny OTT you any $XX rivals quickly, a cable goes them And $XX anyway. now that to are have the connection see money. making you OTT to receive very a product entrants, And the will none bundle of to a basic broadband

into of So been along video up. back traditional you're where system, our distribution as right has economics which things kind the that's kind of the position all end of would

bundle, with and started, households, story again, viewing a distributing local cable total not XX% foundational television element started, So, every up and where truly the Pennsylvania was time. do bundle, grew Everything pay total better the of I an started tell in all and us we of that, to cable stations. cable service. to else XX% are every of pictures our skinny add-on I via believe the quality viewers, in currently I take that when XXXXs the

before for other happy viewing since of and only spent. we was and that compete ratings and been over-the-air they've And options and over-the-air So, therefore the advertising time eyeballs, it is by-product over-the-top the or with cool.

if But for additions will, that our very the period flow projections confident to and house or line we've discussed. to So, continue of you cash feel that top bottom piece free the to revenue distribution that helps side in for of ecosystem. the we that grow line EBIT, distribution

Clay Griffin

Got Thanks. it.

Operator

next move Riley go Barton ahead. FBR. We'll Crockett B. with to Please

Barton Crockett

for things. Thanks cycle issue, What your a this that maybe start bigger impact of news, from business has takeaways uniquely I think of for audience this its of two now? comes really number, taking I'll I issue. all be news. think are to do local are and detailed right I on election that your of bigger interested kind was you a of the the and Great. in a Okay. down kind your been for there any curious guess in question. your local would notable broader just and kind I'm One, audience, and seeing with you terms in compelling terms audience one

Perry A. Sook

literally Texas we a only have in you will I or very host where that where mean, obviously Well, states get host debate overnight of we instant yes. we we the or it markets like I other Where feedback, state-wide ratings, positive. metered but it's and Tennessee tell have the handful metered that.

were Our in and local our markets more viewed than LPM run the focused election news-es in to a lot traditional the our up average.

card report for Now, diary-only non-people markets meter or in markets, for time January. the some final November our see we'll

viewed news-es certainly, in So, much cycle. the But was I advertising and full give report. more you anecdotally, political this were demand can't during a more

Barton Crockett

I sequentially was curious versus the just I bit underneath right. third quirk? All that? is quarter. there of renewal? I so wondering it that. accounting was up, us little then, underneath think, I second million kind a $X OTT? question And if number you for Okay. or number quarter a about that some retrans Was mean, could Was what what's unpack was that picked Was

Thomas E. Carter

No accounting quirks. We don't allow those.

Barton Crockett

Okay.

Thomas E. Carter

OTTs look, But OT because did growth double Yes. base. very it's our T the from first is subscriber It of the crazy, half half? a the to was OTT, it second – off low

we're those. getting actually So, on paid

equates MVPD a has a which And very so, increase. is that a doubled. percentage mid-year of it, And it's price a particular one – doubled, revenue that renewal, small there to then it mid-year has yes, but

Barton Crockett

say one right. All What to the thing, guess, the XXX, – and pay-TV other the below to not that out that could in OTT then just traditional the add on I comment. before just And Okay. TEGNA. troubling continue if OTTs they TEGNA companies And other I you, call the trend smaller particularly called they than are are declining markets, there. a affects that as like in subs

Or with are are – by would describe something instance. TEGNA? for seeing like implication, you you And different? just you anything that? guys, agree How you So you would maybe seeing I'm wondering,

Perry A. Sook

on Well small the By see markets which our our numbers and And sub I can facts. markets is do trend. think small don't that big I all you report counts, got our TEGNA our way markets. I've and give reported has the too. includes we I some

maybe draw think OTT the you trying universe, I more our numbers, So, distinction reported MVPD to made subs. draw. than to that would is the the someone up in traditional by I don't But than X% I lead less

yesterday. we Now was subs on, number believe it I of launched Hulu a just NBC

distributed not we're and all we mean launched we're paid distributed fully been I on not where fully yet. platforms So, that of are OTT the have

MVPDs. we have today don't OTT in all measure seen up have lots can the of what we your than of you But have I we And makes facts them. number. legacy a for number the take like and So say, do more fulsome can is own report I

Barton Crockett

Thanks lot, helpful. That's a right. All Okay. guys.

Operator

next question RBC. with will Kulp Leo come from Please Our go ahead.

Leo Kulp

Good Hi. the question. morning, Thanks taking guys. for

on free guide. the one Just cash flow

stand XXXX today, free assumption. that it where flow cash to core the Based trends we You mentioned that some they haven't given we could reasonable you stand? expect where changed that on is downside

Thomas E. Carter

yet. I work I done haven't the don't know.

Perry A. Sook

our with to you very conservative our is job be know all. I are. assumptions think And what I

candidate XXXX. So I baked assumptions the I'm a I Iowa the bet prepared Presidential to would of mean in in January into Caucuses over. to don't bet because that's say under. the see on not Iowa of will ago, And air yet was – years I we March. not in think four our there

So size. small we've expenses. have I said, I you sample been it's as don't conservative very can enough I with information operating because very a tell

the as expense We is guidance custom we answer quarter, for lease then. have on think fourth to report quarter when – and on of we enough issue respond, XXXX, XXXX-XXXX your of our gets renegotiations in you'll I don't and have contract will some I information And so terms terminations first but substantial in side I you. have

Leo Kulp

very much. Got you it. Thank

Operator

will Jim question from next come Please Research. our Goss with And go ahead. Barrington

James Charles Goss

the an synergies, couple (XX:XX) was station paying the worth station able ROI – in the make a you're in it tapware premium added things. second like existing A One, to market, I Thanks. factoring cut get will of help in in wondering, a is with terms if that requirement? of your route, M&A that

Perry A. Sook

basically have they we and this one would them deleveraging. announced that accretive, would are as two about that talked call the you tell but I the this we morning, I characterize on also Well,

can of the take you measure of multiple for into will, that buyer's the combining from your synergies forma you So, entities one. standalone if pro

So, that has not been our far. experience thus

James Charles Goss

pretty and there well of other doing thought the saved they And ad I'm and smaller be your would one competitors, of net this thing there this something any has that it's sales political – and one own wondering, commissions feel Okay. enough similar that consider Gray, to gross on is agency doing the its with basis. like? between gap Is there that for you done

Perry A. Sook

will say of We're a to XXX somewhere November potential a the border much impact a those across I'm go has higher that effective for we between in as stations XXX bigger could company, again, and there and XXX sure markets. one-man our And Senate year, on and be that, will XXth band that be and the that as election runoff not contested number Mississippi. Mississippi that a is is

commissions, serve of of broke headache So, offices concept in expense the long number favorable basically those we're already, a was a needed push having same you without have certain it's think paying staff, stations, and every as of we to the in time television a self-repping, and if terms it manage relationship our the of have about employees my paying a our directly. adequately – at a to don't time go I career, I that we very ago you learned with rep. looked And

we Obviously we results with So, pleased we're the are the and hope very too. relationship pleased we're with have. you

James Charles Goss

very that. appreciate Thanks I much. Okay.

Operator

are there questions this no time. at And further

Perry A. Sook

very said, XXXX good I XXXX/XXXX thank our books. in we books Well, flow. Obviously free in feel of the much, and quarter, that on here at first with fourth operator. comfortable which results increased report increase joining you in as obviously from political our everyone XXXX, to issue fourth And cash month-and-a-half today. thank early for for quarter of XXXX/XXXX for we bulk the on comes calculus. of all I'd the very very us We the And the to piece also with a like have guidance will look guidance, the report when we plan

the again, we us you forward to So talking year. in for new all you and look thank to joining

Operator

today's participation. concludes Thank you this for conference. your And

You may now disconnect.

Nexstar Media (NXST) 8 Nov 182018 Q3 Earnings call transcript