NXST - Earnings call transcript Q1 2019 | Nexstar Media Group, Inc.

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Operator

Good day and welcome to the Nexstar Media Group 2019 First Quarter Earnings Call. Today's call is being recorded. I would now like to turn the conference over to Mr. Joe Jaffoni. Please go ahead, sir.

Joseph Jaffoni

welcome quarter joining conference and Group Nexstar Mike, first XXXX call. you, everyone the for Media Thank Statements or comments call may made by management forward-looking during statements. include this conference projections on Nexstar current forward-looking based events. statements has expectations these and about future its

by, Forward-looking the that could similar words statements anticipates, include expressions. expects, or by, believes, include preceded or information followed guidance,

whether change today's things, outcome that For for are Nexstar risks consummating Reform in in closing contained including Securities delay involve Litigation concerning forward-looking flow ultimate Act condition statements Nexstar XXXX. competition call, others potential the by based national changes the actions refinance and subject markets regional various the and forward-looking and not television and local not fluctuations timing and any future of is or and timing the protection stations' no claims risk obtained important programming that approval that in satisfied world may of of regulatory by the uncertainties to technological or and regulatory update otherwise. the cash subject announced required benefits of expenses, achievement the performance, successful the Nexstar the the the the new and of events. these statements, factors transaction Nexstar's Nexstar, in for proposed undertakes and law, information, a and other statements future communication thereof conditions industry be of between of debt, government transaction; is a operating integration may statements transaction including future or and obligation not of these the on including changes of Harbor financial Tribune and broadcast effects are and television Unless assumptions, any ability pricing forward-looking news proposed to the regulation of synergies not cost and the conditions advertising, events in revenue, The as reductions, on forward-looking of volatility operating the from to the revise the the areas, is proposed service outstanding in served Safe obtained occur. that may in net national transaction be that developments delayed, economies, Tribune events impact of among broadcasting Private Media, major in to Media and and anticipated; today's light uncertainties and close; risk costs, not In transaction contained discussed required result a risks, may to consolidation,

You the should reliance as which these of not date only of on place speak statements forward-looking today's call. undue

for expectations, details it's Well, on factors now, to call patience go you see please Perry your over host, affect filings Perry, pleasure my Exchange Nexstar's could your please more that thank And Chairman, and Commission. Chief Officer, Securities ahead. Executive the Sook. For President turn and that. with to with these conference Nexstar the

Perry Sook

quarter for divestiture operating leverage free you completing front XXXX made and the returns announced related well Media outlook Today, review and our we've flow upside to ongoing in vigilance cash record first the ongoing the progress results. us today Nexstar's this morning, Joe, and transactions. and you, drive in reducing Thank to review to shareholder progress Most Thank all other we'll our and the beyond. XXXX growth toward quarter's transaction, initiatives notably, good the Tribune on everyone. as joining as

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

was and strong in markets market Award their our and excellent opportunities communities Many start local by and that the in we I businesses. also honored Awards our across is to profession highest and and colleagues and overall an scale, news regional Murrow Before we work tirelessly trustworthy critical highlights we of it where to innovation local operate. to local while our our tremendous ongoing highest-quality the communities neighbors in service to are ensure the the to We're sometimes for and XXXX dedicated my where Cronkite of many ideals essential our and credible, worked to colleagues acknowledge teams provide news and Edward On passionately our a diversification service entries public the to lifesaving award-winning we off journalists XXX operations Nexstar commitment of pursuit host X,XXX as of country. emergency. services local coverage local more to we our our expanded to start, of as of our results. standings back all the proud recently the and news, programming local and want news capitalize were serve who local of our local who the of delivering and and Walter operate, R. Their for market extraordinarily I localism, communities communities our our than our and bestowed viewers local including growth stations, on safety with excellence. times four a congratulate local Nexstar the serve giving highlighted highlighted garnering were they which XX awards, provided in

net non-recurring quarter later Olympic despite first revenue, Tribune of to accretive preparations expenses. the for the the one-time million record operating income, quarter election level of represents highly operations, the another cycle, including also renewals for period flow BCF, significant XXXX momentum, consent we transaction an and on current of this political and led year. as as growth focus EBITDA Our flow Nexstar the which year of quarter of income first our record start of retransmission well balance and exciting cash operating absence revenue and and and XXXX net We generated of expected $X.X first the free with reflects free transaction cash year as Media completion adjusted this

of to delivered generate we in the For the in to line, XXXX every $X.XX which non-political to revenue $X.XX QX of dollar cash flow about free us $XXX.X compared million period. enabled of cash net flow prior quarter, XXXX, per about free of the XX% QX share or

So, by we've over in people, our allowed to media and that has complementary the accretive our us metric years, local to which net reducing and while in capital XXX%, just returning shareholders. our platform, same two in important time invest grown acquisitions, at debt

transaction. the to closing the three strategic proceeds quarter transactions XX this to addition XX our while later will markets exceeds our we transactions Tribune the the financially divest solid comprehensive station divestitures concurrent $X.XX announced with by in and proceeds early XX%. a we total the closer of Media gross year, billion. and initial moving commitment+ compelling of performance, projections compliance operating April, In during proposed gross completing from first for addressed divesture which the of Total our us aggregate regulatory to and stations also In in Tribune approximately

highlights, diversification per total, continue and interest our say, build and flow expenses over cash or of advertising capital million our our Winter before will will growth approximately flow flow million the projections. share. new-to-television While cash in on our quarterly XX% reinforce synergies, go retrans comparable X.X%, after to of advertising, highlights equivalent the elimination of XXXX serve revenue reflecting $XXX to on through which in I non-political, the first record These revenue, rose to the quarter for growth one-time indicating structure, XXXX/XXXX result Nexstar's grow period. $XX free certain less items the of here ad be political XXXX to I'll in average net by other Tom the to quarter those $X.X our of declined inclusive in television an through $XX.XX those revenue. of we expectations in our numbers, you developments and should is offset non-Olympic ability now walk and revenue than first revenue by transaction Tribune as cycle, update as first annual Again, In Olympics approximately call. Nexstar's X.X%, free recorded that or million years, divested, cash our confidence the excluding

of QX spend and overall up of March, of by in previewed healthy ad percentage with new-to-television we a retransmission QX call, That TV absence pacings offset equaling ad the in - which that were a quarter of our ongoing a by our net X% high-single-digit to Olympic period prior year. reflect rise of QX revenue related revenue decline was revenue revenue positive and with media business and first levels quarter the on basis excluding accounted to political over XX.X% ad and five increased XXXX, XXXX, the was QX first in February As mix. our prior-year flat of over In January the $XXX.X million. continues digital partially shift political, net compared collectively of spending. illustrating million, Combined on XX.X% $XX.X to revenue and core categories to X.X% were XX revenue fee in of new again our for of top low-single-digits the

fee XX.X% to fee retransmission OTT double-digit the expect company's our revenue continue retransmission agreements. MVPDs by of from the recent quarter $XX and First prior-year the revenue contributions At increased over reflecting renewals or distribution distribution growing million with period, quarter, in distribution highest a revenue the and in at million quarterly history, growth the level $XXX long-term we reached pace. ever agreements

this highly SaaS. sublevels in consent us renewed year-end our in XXXX with consistency more representing growth Retransmission of growth revenue by subscriber XXXX approximately visible see for and continued to for beyond. OTT agreements XXXX with our from renewed to continue remains base pay-TV markets We XX% XX% in than our of late in were be source continued

presentation As the the in our our approximately are our once transaction, immediately account for distribution December, and stations targeted will acquisition terms new $XXX and million complete only to agreements on we party opportunities last noted from million we revenue announced and transaction. synergies $XX we rates of due Digital outlined by of million in Tribune the Tribune Winter the the time profitable $X revenue of at digital digital Olympic to recorded forward. focus going million XXXX period the $XX our over approximately pursuing revenue continued comparable declined

transaction, a close updates timeline with the on the in Tribune now to remains which on on third to our few Moving track additional quarter.

earlier, station excess our of of initial I the in billion divestures announced of the proceeds estimate was billion. $X As from mentioned $X.XX gross

times XX.X two-year amounts about the flow addition, stations In multiple these cash blended all the invested broadcast for of average aggregate be to to stations. multiple

divesture Understandably, result, the of the the on the and expectations have were we HSR our all applications Nexstar notice period closing DOJ standpoint at comment a ownership regulatory of May, we committed reduced leverage shareholders. to with XXXX, a have our for approval, voted made portfolio. In than very X.X. from March, brings transaction has Media other number from we're Xh. as And public approvals. anticipated accretive the initial diversified as put has leverage Commission increased FCC approve transaction our now stockholders be will high all And the and that has compliance FCC the and the ending the required a value Tribune and the in awaiting now late completed expectation net closing applications, in times financing which borrowings these well transaction, our and Nexstar cap. approved estimate scale lower our will Nexstar at the April, the public that Tribune and X.X for be of As DOJ, transactions on Trade Nexstar's to Since Federal scripts for transaction of applications national transaction. the April, overwhelmingly with divestiture approximately

capital, match XXXX our in our we The of of for increase With to in from flow driving improving of operating Notably, incurrence progress value. in ability acquisitions, competitive effect and expenses, and value. the clear base benefits from Tribune debt, towards period expected path marks reflected after our synergy and $XX.X proven M&A this criterion scale, operating with our the management our grow free net Tribune significantly and proceeds, opportunity billion practices period generated perfect by expanded to base believe deleveraging integration, of experienced flexibility, approach is rapid transaction flow position the further to $XXX.X year divestiture the the the financial with million XXXX $X.X our giving as shareholders cash revenues to and first in a rose transaction, $XXX our realize same our our soon-to-be its of of managing a it the million cost another ending discipline acquisition time disciplined by strategically is goal capital shareholder XXXX, that expand meaningful transaction to as operations. to through focused all XXXX. expanding cash our grew operating over while the in cash will free strategic see Nexstar structure growth Our free financial flow million to all present we team, to Nexstar's from and

business many years Nexstar's approximately we to and the to continue that every X location, has and XXXX. decline the integrate a by leverage in quarter, times quickly we deliver the expectations XX proven results and the first to We the at In that usually our ensure of financial completed meet expect practice announced. operating to time visits which acquisitions and Tribune exceed to provide deal over Media was end we operating

for targets on our delivering flow the exceeding significant closing over that before, said the financial excellent we've said, turn As flow the cycle with all free the and path a near our upcoming update. transaction, Nexstar review me continued has a of in cash and to enhancement growing the value. free Tom Tribune Carter current visibility or and of cash call now and clear long-term Tom? With let the for shareholder to and

Tom Carter

Thanks, review over Nexstar's for XXXX and represents a million political and and of guidance. Total our with QX morning, provide an everyone. update TV of XXXX. of after Local The X.X%. QX and decrease balance which million largest of $X was the I'll to I'll to in was of revenue XXXX. that was on $XX.X net $XXX.X decline statement from period data, of start income structure which down of increase $X.X approximately sheet million, Perry, $X.X and capital points a X.X% some national in QX revenue a good same XXXX million component million. X.X% down were revenue of ad revenue QX combined

XXXX, just of as which During a we lack the January month basis quarter. made Retransmission a a - the relative saw of which Perry quarter. on station don't recurring as mentioned, was XX.X% fees was low-single-digits driver Olympic here on in a of and vary largest March the same revenue, same we represents the station the due of to quarter, for during stop up the that acquisitions QX immaterial or I'll significantly the the and within nature $XXX were million, second. Same results results increase,

results XX.X% same X% cash And The up before, XX.X% on and expenses. one-time So, basis. difference flow as cash all the prior of was as those $XXX.X same was expenses. basically million million for to to revenues to flat, one-time station. opposed statistics is, well flow same are a up as X.X% free to retrans $XXX.X to million Perry roughly mentioned adjusted reported basis EBITDA were Broadcast one as reported cash a station the was up $XXX.X prior on

the January I in Olympics. $X.X XXXX quarter Excluding by million percentage increases political, to before. mentioned offset first advertising were that again, or related as in high-single-digit And basis X.X% television components the of decline a February and declined by single-digit March,

expectations our X.X% First year $XXX which our fee million reflects retransmission digital with our by levels our strong in million to XX.X% million, and launches $XX quarter vMVPD the regard vMVPD consistent the retransmission non-television subscriber growth partially due revenue also markets. of and some are with by new pace to in revenue $XXX advertising on We're to smaller continued expectations a for to offset revenue growth in was revenue. growth decline of

top-line revenue also changes Winter stated business. impacted growth near-term impacted aforementioned in in prior As the in call, Olympic marginally lines to digital continued de-emphasis last The quarter. we and previously in net profitable non-profitable and recorded years due growth we our the be in cyclical quarter's first of marketplace digital anticipate would of

digital revenue in our XXXX. second improvement half in growth of expect the We

of representing XX% continued from with be base beyond. subscriber XXXX XXXX, than visible Perry consent renewed renewed highly to last and late XX% retransmission As mentioned, agreements approximately year revenue our source and remains this more year-end for growth by

additional reflecting increased costs decline quarter X.X%. Same-station to in programming programming X%, that reflects affiliation expenses, budgeted were relating expenses, The the $X First in approximately those occurred quarter trade expense of SG&A in expenses decrease and of a the expense excluding million station direct primarily variable in network XXXX. or political increase net fixed X.X% first operating down quarter first expenses. sales

corporate of inclusive $XX.X quarter of at First was million expectations $X.X with related and one-time our transaction stock-based the million, line to million in expense $X.X of compensation costs merger. Tribune

for Excluding was one-time transaction stock the corporate essentially and comp, expenses were with our quarter. expenses guidance recurring which line in flat, first

recurring for the the and incentive project year. XXXX costs. corporate equity $X that the new awards expenses, Non-cash to for approximately to ahead we transaction to during earlier of million comp $X compensation levels, overhead stock quarter, will second transaction to capitalized, million $XX be of approximately cannot are second million issuance fees QX is be reflecting exclusive quarter Tribune-related Looking quarter. cash and Cash expected second professional the expected year, this primarily similar

of quarter, we and $X.XX billion at covenant. relating closed $XXX when of debt, net leverage $XX million transaction. in debt the first by by of This net to million and we January MEG Thus, sheet, $X.XXX end review headroom X.XX of leverage the Outstanding in million. $XX was debt obviously as billion the XXXX which Turning to QX QX X.XX of items at a the the covenant the actual gives quite of at and of Total XX/XX/XXXX. bit versus compares the was that X.XX to first-lien XXXX, to compares XX/XX times, times balance compares was at the at amount end key a covenant the billion, $X.X X.XX level so cash. and of quarter debt funded XX/XX/XXXX end us reduced of inclusive I'll to X.XX, XXXX net

even reduced allocated we've capital the Media transaction General as to net as - quickly $XXX nine even operation closing other by - since we approximately debt several quarters through enhancement activities. of addition, though debt In million

As our $X.X financing markets relates in of provided Deutsche intend cash fund and of the America to have funding committed average we reflect be refinancing our intention balance to previous Bank proper acquisition and flexibility. debt the cost pro Similar have to to of billion fixed opportunistic attractive Merrill our is initially prepayment Credit and weighted it tapping an floating of Media, consideration. transactions' capital Suisse transaction, to and Bank pending Lynch, Tribune structure and capital, in forma by our the

from second agreements gross and of aggregate the and for divestitures quarter, 'XX, the proceeds reduce the closing, three estimate of billion of leverage to stations our At during XX and times which use mentioned, we level in total proceeds net to XX XQ to fund Perry times. to first we sell acquisition net markets we Tribune in into expect entered a As $X.XX to the of our X.X is X.X of approximately debt. prior compared anticipated intend

transaction, Our as ratio $XXX of synergies giving expenses debt, year EBITDA adjusted occurrence leverage the first on net the as effect million the amount. LQA proceeds of divestiture based is net to transaction and after anticipated well

$XX the amounted through Nexstar's flow to aforementioned funded to decline quarter of our from million leverage $XX reduction growing We flow and base value the first X cash and approximately reduction. further paid end balance to million on which we in end, leverage generated in $XXX capital quarter, debt by net our including of to to loan this million approximately in term return enhance $XX take to dividend we another to payments the have shareholder free Subsequent in the committed April. remain cash our million initiatives, times in operations, to total continue free With action expect applying of XXXX.

year, compared 'XX. to interest of was prior in interest compared expense $XX to QX $XX million $XX $XX amounted quarter million million the in while to cash First million

'XX. cash QX million in We of paid taxes of taxes approximately to to In a expect refund to of $X.X million the expense in amount $XX XXXX, million we only prior compared $X.X cash operating of year. cash interest XQ of

operating in digital was million station full million the taxes million are our million for of $XX.X amount in station which to related of the investments, $XX to to operations, We totaled reimbursable. spectrum tax $XX.X relinquishment for with $XXX for infrastructure QX. with Nexstar's programming remaining approximately continue quarter to payments approximately and million, the year which cash and repack cash XXXX, $XX CapEx of expect cost, platform, fully

of approximate million And We expect this the free CapEx CapEx. estimate compares million, of of we reiterate station our of $XXX for cash million, expenses. additional stand-alone of one-time repack impact cycle a and transaction annual to consensus inclusive $X.X or cash second the to million, $XXX.X with the in operations for amount $XX flow guidance quarter basis. approximately Free flow $XX.XX Nexstar $XXX on approximately share the per XXXX/XXXX of for an

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

flow communities. well finalize Perry this growth million share to flow all per our our local realization, do happen guide completed of cycle and intend synergy integrations, operations. all service reporting back approximately Nexstar's As to Nexstar capital expect items. financing, or per and 'XX/'XX you including update We free we In across full elements which $XX.XX not specific of our result you year, the remind to annual $XXX legacy guidance average this approximately of the free later operations, structure, our $XXX diligence. that the year is we forward year look Tribune million executing in functions, representing of later finalize until in XX% cash we as cash to of these we will transaction the summary, have We'll Tribune the of compared noted, to to

pending we consistency and have With we visibility near shareholder value results. have closing acquisition some the areas expect as financial well path with Our for value. accretive before concludes the over Media, remarks now results a to significant to our financial for it That from derive enhancement for review to the growth continued continue turn clear believe as Q&A. Tribune call. to driven back disciplines of I'll Perry our we forged our and and in long-term these

Perry Sook

very Thanks much, Tom.

is Looking our in shareholders. The for the rapidly ahead Upon compelling compete standards holds year, with and revenue the opportunity our pro returns XXXX and well and positioned with that increased company geographic or long-term Tribune next-gen a overall radio new cycle opportunity and number innovative for I'm advertising services, to Media Nexstar industry. for and States EBITDA cash local will our the industry $XXX operated our X.X to landscape, FCC our combined ATSC delivering transforming nearly while our with what approximately the per aforementioned full increased extending as service strategic as levels the for further pending Tribune free television greater of divestitures. forma local in double the voluntary record the Nexstar more the communities all diversity support station for growth flow this XXXX our ideally future transaction TV reach. to United the the stations shareholders for annual With automation the This in today's Nextar's expand and of average Media, entity million portfolio forma represents transaction pro XXX average financially of largest adoption be and be of growth annual our also XXX will one a the XX% television and owned and closing, adjusted in than forma power in for excited of will audience group for markets. pro required and

flow believe as begin double-digit Tribune substantial distribution well we retransmission contributions and and visibility to this we levels all renewals and let's have a digital year growth. near that, from localism, to possibly benefit to free for interest. our of on areas innovation of continued exceeding election thank growth cycle, to value cash later call be address unprecedented for large the what fact path we a and the today. and And in and year-end, With of contract of call XXXX the long-term delivering shareholder to our for from continued revenue, your you on them, XXXX Q&A and now, combined our clear and specific As at open excellent Operator? number initial spending targets, presidential to to a the the joining commitment us enhancement as collectively

Operator

[Operator from Zack B. Silver Instructions] question our And first FBR. Riley comes with

Zack Silver

helpful. at technology you Media thinking early the more some around some the Institute revenue got that be provide And could month, remarks interesting if some of opportunities you detail with your Perry, last help recognizing that discussion X.X. about ATSC still, would wondering on it's days but that

Perry Sook

Sure.

it ATSC another try We And watch. this other could ability the car data and of as but access where I to is ancillary going the to areas I yet. think transmission the a to as it. that that will advanced things And that addition of is or Institute, have well our of goal, of the We're the obviously value largest we're the could navigation transition perhaps opportunities the are in internally my of come said able I on, it's Internet to relates there's and the one hoping sell work fore. think use we the see can or principle our kids as potential the serve add build I of some something we to at have markets something to wide-spread it video. more belief X.X. for by in They to We to Media perhaps we're the Co. to autonomous walk my Spectrum think we end those we additional play that we having be to XG will crawl as think. that year. back-of-the-head think conditional use haven't to will, before can had monitor along a of serving best stage spectrum four connect just those of digital transition and spectrum people that this. Phoenix. ultimately we providing our think And very going Pearl, build of meeting framework the We the ancillary to ambitious highs year. a approximately by kind use revenue of of spectrum. technology, the the we to well we the XX are the to auto in and run it end of we to what of the tools for use Things with The the value seat creator on to is, in a market many have in for the fairly of and by obviously We X.X being advertising spectrum create the if part next economic But said much will of overwriting will wireless could come plan terms in X.X, our opportunities, we go in touched you think video local industry we to not and in wants potentially and that and markets thought And transition ubiquitous have and whether that interconnector have the all wireless our the industry, dual markets platform, market,

Zack Silver

And more, I then, if one could.

free that flow boost in general Tribute getting is You've combined local revenues, a new TV I you guidance? coming same which mostly currently and see from ad company markets. the the been with if think that opportunity media to legacy cash is factored I'm to if wondering nice from

Perry Sook

It markets to each an we local programming that believe additional Tribune in increase and to not not opportunity our to in but factored our focus, new television of there do is directly advertisers direct developing the is only increase on business. local but focus additional

focus and playbook the establish like can five for the of just tee two, be see I see stations the would financials WGNA I things date And WGN just that We at operating that's well, out. the contracts four, as kind So, tell synergies three, into beyond the we operating increase million the happen synergies. but the us business as opportunities deep years lead operating in as at to we're to results on now the on and doing visits. we a Radio. that first you think of are markets to markets. in enhanced enhance the budgets in, that, Tribune post local say synergies to the me And would of efficiencies initial closing. expect our could To each well we right opportunity of I characterize don't our will I guided in will and the all running site closing $XXX what up will overlaying each synergies the but dive

Operator

Benchmark Kurnos comes next question Company. Dan from our with And

Dan Kurnos

surprise to no distribution you outperform Perry, continued that guys retrans. on side, the the

of don't in have which want at here. on thinking the net curious, you helpful. the get the and Just you Do skis updated like of with guide? of our gave high perspective. Or Tribune, to XXXX I - subs, negotiate to about you're feels It all undershooting I mean how guys what color year, like ahead say. a But the I half growth able we're looks? around step and any just kind least both kind of back being level with lot Tribune from should feels Obviously of it on XXXX. thoughts relative to was big up

Tom Carter

is I - Dan, think Well that Tom. this

very in we're takes retrans just a very net basis. and we renewals to of a mean I as gross on looking contracts on it and the the puts think innings retrans relates and feel the the the Both that. at I of XXXX. early good and game, about the

our little a but clearly early too QX tell, results in exceeded our it's to expectations. So,

I think some of comes. that really

it which portfolio, to our of They're by that's take step We perspective, around we're continued slow on new also with that took over the are the seeing a XX perspective. of their Both vMVPD last all MVPDs strong But seeing from were price rate in Now, launch organic a healthy getting the markets growth move now due which of with continued course exception the growth they big back DirecTV in an to category. half from increase. and the months. to

just And think have think, rate possible to good basis. us, fundamental trying with that. for I And we more definitive But business, a stick we're the very What's overlay still I a now, unit I So, from count. think of to remains what on art the that have on come. we the we'll until data.

Dan Kurnos

Got it.

Joseph Jaffoni

retrans high Dan, net, CW way. margin I much affiliates, that where Tribune a if to you to keep conversion quantum a want of score that gross would brings also we of retrans remind you very higher have

an on point So, this probably at perspective. the the you say could over I margin on would all-in a bet on bias basis

Dan Kurnos

requisite super the kind commentary That's core. and then, Tom. of just of market, the and kind Perry, helpful question on And interesting down

QX category QX both Thanks. Just on of into strength any thoughts heading and QX? and kind pacings in

Perry Sook

we still schematically say political and and last digits that core year. as inventory. show QX first. Obviously turn and continues than if we than that chasing at buy But would job I'm on be on going it March. it would quarter pace that than in second $X and somewhat say show did was level digital with say recovered the the for But on results roughly - first $XX-plus-million better the were better terms in And in but second But line. XXX% a the is year be the work by our January year And March through station the core the made and factor the quarter. lot at mid-plus look as I we comp on was first able see be up colors half in comparable over - January decision level to fact perspective, anticipate not And the would that you'll unprofitable more we going to back that a is and I only system, in unprofitable try Sure. some greater way that's in we the that our X%, to the from a than revenue and XXXX results of to mid-single that's the a we'll back we February, I of the in extraneous bottom in base digital the down digital did underlying great probably growth in said, grew of at a mid system number obviously revenue we we basis. prior will of Olympics we the through million-plus the we time and and growth obviously we do quarter in top-line you ad last just growth that were was extract we its growth better give revenue. on revenue that year displaced and a the to not that single are remains. quarter, would

Operator

comes question from with David Evercore. next our And Joyce

David Joyce

if and questions regulatory the and about is review DOJ provide you of thoughts front the Couple Thanks. think FCC please the your on cap? ownership the on could TV where national workshop then you the quadrennial also

Perry Sook

is current digital from Sure having the most the applaud of television read what of read definition. the the last folks well, realities I from for and some and testify around both - get of the market acknowledging taking on I market these to the think workshops to press workshops truly today. industries the reports step week DOJ's DOJ

faces many the positive that think a but those it year over for and digital, was step address first I other I realities good will steps first marketplace good the be so a was So but sources first competition it the from was step. it think step to reconsidering to as probably what a in it only very television not positions, relates

relates to as review pardon quadrennial national is comments it may our specifically that cap and quadrennial we the from comment, process. underway know, me the review filed But you ownership last week. As our exempted the

said comments the hopeful the that in filed to proceedings. those are recently realities. continue weeks. But the of marketplace rule is are that two FCC on making own times separate of its is that current that in again will couple the with probably So more last terms along we proceeding. reflecting We've we always behind And regulatory DOJ obviously recognize scheme

future. lobby behalf So, hopeful we there will that change the that will in and continue I'm to be on

David Joyce

any timing, update there? on of you any the Do sense have sort

Perry Sook

we a ownership been they that filed hope and an I I is we we, When relates will And that sort proceeding obviously and that their at would there takes mean and to will will, has under period year. those no have sometime We're insight But into comments really process. cap, this but for conclusion ongoing when do and as do purview. a of the FCC to totally while quadrennial it. what to all we they action any national come be comments particularly don't. review they will the outstanding is hopeful that. it of it if a the obviously some to reply

David Joyce

outside acquisition on is do a the Just revenue question all quick of you some from that have digital, liquid asset? that generated of activity or that

Perry Sook

is revenue at the if our in digital generate two Yes, markets made that's up about One, our is revenue look local reported that basic the components. we and local number. you half on number sites the it of

number activities. is various generates its the of our half other The what Nexstar LLC from digital subsidiary Digital

local sites. that local revenue quarter, our that's so revenue from up a we of single-digit mid did against growth number the was our first again And X-digit site see year on Olympic the in and last

a of inventory buy rules resell, decision a sometimes we that in the that has and financial that at to of they in with for growth we're will things. against again - those not up. of that's some publishers quarter the you of set those out loss we're and we you're sponsored the I tell terms the that's piece post from the when those - over with second So and programmatic resell are video to marketplace they'll single-digits they'll just digital Google but pacing dealing our growth revenue And And that. in and inventory set make quarter the from line then of and game happened obviously internally forecasts. statements not sake will Nexstar and double-digits game, buy kinds social the the the Facebook here Facebook, in high the the read midstream change made rules in go conscious and competitive I second bottom show cross top that the going Digital showing

that time the revenue of growth fourth lap think in year. year streams those impairment an charge to that half we the and we write-down related the over last you'll and of made it's stand cycle its either working you to in notice about will ourselves I the of of this previously. through chosen did back this quarter see then we the underlying that that we have decision some way So inherited behind operations took and probably the And we and unprofitable

Joseph Jaffoni

a to finer just point on put And it.

of On business, just are of the Nexstar digital liquid. lines derived side, different not number a revenues from

our cetera. So social It's et system CMS platform. it's media our

liquid. are a digital not the besides just - number on there of Nexstar contributors it's side So

Operator

Wolfe And question our Research. Ryvicker with Marci comes from next

Marci Ryvicker

more on want just to because I commentary, million dig digital. then $XX confused a you grow little lost in just your you in revenue. I'm down bit did it will year-over-year, and What shut

maybe to how to I'm that confused of quarters look So, relative should million as the rest in QX? the $XX

Perry Sook

year we digital end and Nexstar the that the local hopefully will answers QX, of the comps, of and piece, think continue meaningfully comps results to this to results, in will going show by is XXXX, prior if to will your in that definitely to to negative that's year and question. for grow the The QX total it - will likely in digital return piece. website not a to growth but easier part year, relative not clearly piece Marci XXXX decline to digital XXXX rest revenue have will variances it's year-over-year it grow it negative the the show continue QX, the

Marci Ryvicker

not possible? can shut down? then talk about And what was What you Yes. you

Perry Sook

growth that shut Sure, We we to profitable well, revenue past. Kickserv, Yashi the and Federated probably it's barely in there that revenue a you would you have is social year hyphen tell revenue team of Dedicated number association that only Media, a with media, pivoted I Facebook. a a heard high-single that science we generate names a number now to down against was have data But ago. going digit

at change So changing taste we back. evolve Google marketplace. mix And was to I take our digital and the the caused kind as to there step said rules first meet the that that a of into a the to revenue of quarter of us continue the again portfolio going

remedied are with now we that Google now business have We again. doing and

showing a like perspective, it I a prior a here of that's when revenues changing improvement our and revenue perspective were size local website. So that to, a you site But and a success growth, from to chase together, vision you'll not if kind world, of this looks at made loss platform. the comscore see top but build in a digital linear unprofitable what Nexstar that look It from the of just We're decision in of media the and look portfolio the on year. is of kind the think take single also again information for Tribune we're and also revenue to comp only putting sake country going term. and at and in the incremental digital our revenue I sequential not not long for

that different to can network want homepage XXX can do country, a kind that develop same we we be of now but an on do the reaches, deliver we of you two-thirds Now, homepages, if the that can takeover effort. ad it

safe content for Raifman brand his revenue Greg are those much local it rather being long game of now. diversity And I'd the there right unprofitable on and things sake. working that added or play the the purely chase With and are team quarter then

Marci Ryvicker

QX up core like sounded it Perry, singles. you mid maybe for clarifications two agree, I you said

think and second I station in I for got So scripts that? confirm from to and just I heard to approval FTC, just the prepared confirm your DOJ comments, the thing want I the that is, want divestiture

Perry Sook

approval HSR for acquisition for of necessary termination to these in ownership and stations the caps. divestiture Tribune FTC the related early The national

not these markets. So overlap were

the the DOJ was in buyers piece have that not the and DOJ with termination markets FTC divestiture at is overlap three of recently. the still the early that its and arms now met have is buyers. of been What as an Two front DOJ divestiture DOJ the issue of the received they So are, HSR. of DOJ

we the all take say further process of from as from known May are as including brand either perspective all as has think we will are on the comment a the and and positive public divestiture and DOJ need or mentioned, as on time, through period notice, Nexstar the they entities sign public we Tribune So I the and could end safe we this XX. at that nothing which said move applications they SEC applications that

of at potentially time big they the take government So a bind at the their to we grant our I'm quarter stand be will sure to they And attempting But accelerated. it's slightly approvals. that could not the with their receive a to that, June. are could fact and end by of that third make sure potentially timeline still closing we footed minimum transaction.

mid-single single-digit I said Your of over That's to are question digits. forecasting But kind currently that not improvement we be the pacing, sequential we on will low first core, growth the say would finish, I digits. the mid-single see would over quarter, where a in if more we're of year-on-quarter. prior

Operator

Stephens. And Kyle our next from question comes with Evans

Kyle Evans

question, I Two double-digit the part year. mentioned retrans for you Perry retrans think

and negotiated in Just rates commentary a the want visibility related escalators on the level and at those you are that MVPDs, kind those then and way a have to where do around the money net clarify on virtual and of what note, of follow. and got subs lot given flows meant you make sure focus a I've

Tom Carter

their sub on MVPD into of basically, there's basis the still to cash yet. a not counts regard With visible we're lot a Sure. virtual is, so

in recognized it as revenue So comes we're were accruing not that the in.

and near-term double-digit want net so of retrans we're, in changed the and the that regard it virtual real with of with to exercise. kind good question And transaction cadence time we our revenue regard answer Perry contribution. perspective, about from just retrans growth to have So or if clear, about think the you to guidance I'll in contracts. let we be I not feel to think it MVPD

Perry Sook

It MVPD have from that And this year network those just for number well. network agreements size Kyle, been up the the virtual the increase. on and we the of now as are the increase, depends, but negotiate re-pricing offers a initial of an

launches being networks now, absolutely backdrop, MVPD subs as have our with said, we they as commitments, dollars Vue, announced per be will again, we're those fulfill XX continue subscriber or range the because Tom YouTube, the Hulu we days markets agreements going us PlayStation to from in and said to as in continue and incremental last not. believe for or DirecTV the to we the OTT the, they HBO in our and of exactly have MVPD, what or same of virtual are of with currently mean will those be and over subscriber is as it us roughly in opt-in to that a out been providing decline of the the now negotiate in benefit to And those net with in somewhere today the but obviously, are to as we'll of flat So more will that who economics XX are XX the choice taken the MVPD count a number today. of lot And is launching than announced, in example. that traditional the But up not Tom XX find launched emergence terms by subscribers. months markets sub. launched

we where the of puts all XX.X% and do growth the retransmission we're up we year. that here project XX% this double-digit throughout were is first and backdrop net quarter of revenue months our the we same at number will the remainder against retrans and of in have ago So that of revenue and the XX the takes,

Kyle Evans

diving us strategic ad markets, kind OTT of of and of into competitors and view first today longer level third-party view with networks kind own Can give the head how Could you you've that you three kind there Thanks. got streaming their channels. you that of you tell have view how high term. and launching you what that market are

Perry Sook

have we of OTT terms What in revenues?

Kyle Evans

Yes.

Perry Sook

off and things source growing Well, low in opportunity but by that came scheme to that emerging base a we continue again stream to our do And fulfilled programmatic revenue that for grow in that at small there using programmatically. it point there's digital liquid. very is Digital space the and time, believe of currently revenue again, this the are is of division capabilities competing being but an we in a with the is division, growing it

Kyle Evans

have what third-party I'm or you asking, there units be network. starting ad like your today? expecting should I are channels guess peers, a you to you with start Would be we happy

Perry Sook

that there couple we. are I of all first think of Well things,

continue product It which subscription its XXX% mean, consumer have else. our direct It's we late a broaden to our we app We called content. is infancy. and And But that going product out. we [Cron-on], a early consumer the we launched can kind in in San with to to own, rent to think exclusive I thing that's you its I it this supported launched work Francisco, tell news direct is figured year. last we appeal, with profitable the is is revenues that of in local once only product everything have we

are inning specific, for subscribers we but a half sports or XXXX in we ballgame. specific the to the so month see we top the of on, the we a charge client up it So learnings offering local, for and this be market-specific we and to consumer have weather now to have have will any they a year, Interesting direct year. over again we rollout service. value this XXX traffic first the But, news, right signed of look

Jenkins, collaborating if is Raifman and team CTO our are in an team direct with Brett and space information internally offerings. us In of for Tim learnings Greg Busch news to along his opportunity this on the exclusive all local there our and and see and his terms consumer with product

Operator

with question Craig Huber Huber Partners. Research And next comes our from

Craig Huber

of help station suppose The digital on percent us first question what next Can the level the that from comes digital company you level? revenue. TV ad

Perry Sook

would roughly and be our in an as sites the is revenue our of reporting It broadcasting stations' extra local NBI revenue total accounting internal digital revenue. digital or from classified that half comes

Craig Huber

sort you of think or base of sort on could, about three could how switch your cost of to rest for basis. Put if that your costs, compensation, network of you year. think if a last we model this quarters aside And cost should over the you the year-over-year

Perry Sook

from but et first cetera. you're a sales also going down, some the such only as comp from in XXXX similar an see and because had think to quarter, we simply expenses, SG&A go political from perspective events I that not we a larger to number Well, debates, political specific on of perspective, local et a news, National Rep did a cetera, focusing perspective

political Additional events. programing half our around

before, and then fixed see to the you will our costs. moderate I as over mentioned SG&A year continue So moderate,

wherever We expenses, because growth controllable affiliate exactly that that rein possible continue expenses. a down that on We we've programing right. rate. significant, see expenses to to a and significant increasing other keep ones drive at all you're continued got namely in so Knowing

Craig Huber

think second the quarter. the I quarter. make quarter. trending right first low-single-digits TV I now digits, mid-single want also that Thank was just then about quarter in How specifically speak it's to the revenue up you. thought ad reasonable Perry whole second you is also maybe And in you sure you right more for the on expect number and maybe have you can how pacings, court year-over-year said up for the to auto

Perry Sook

cadence at over we and are the quarter, that I'm are we of evolves will level, you a of outpacing Yes, not guiding mid-single correct, kind the the course at pacing the business that how of but digit finish knowing level.

I below finish slightly think we'll that.

first throughout than of will channel of story quarter the of focus a in in the Chrysler fourth and to quarter, quarter recurring to way the as comes the only in well, they growth terms it that's XX% would written, year. and We're Motors, that better spending Chevrolet, and from better less seeing a to kind growth. Dodge one than dealer quarter somewhat results checks was were that's be. first ,automotive us about in your hear that generating than you used in General quarter category the terms Just prior as sure the business relates our as Jeep local area Subaru down second is profitable be for comps been is business but is Dealers I'm significantly of are automotive

less focused local dealers five auto picture money to put spending buy rest because advertising, buy as duplication, intenders are but our So don't sell need to the into on where one you they're the trying on we sites of and of but auto the brand, positive number. digit are of only your dealers the local quarter, for now site Tier the on. X intenders create build In awareness are not TV, our to by second pacing that mid-single you up kind our a

So we automotive of is It first in XX% the core improving. about revenue picture, our quarter. think overall, was

the hanging same kind at in level. So about of

is that question. I So hope your responsive to

that was attorneys automotive, we're we as up, behind foods you're where, retail. If banking on at categories, looking and and categories up basically fast were up, then said, product flat, medical repair Cable were healthcare paid programing was was overall the up, furniture

Craig Huber

of local sense your is economists the My guys out I of in I want what economy around just etcetera. the is talk sense, last Perry. country. out there. your see as the level, What's how you doing governance get doing, going you with there? market, a sense The If the them given to you're could but the do economy people What's your the doing, are stations is ask. go question, visit

Perry Sook

that Well, the bullish Main I economy. in concert that this the Street no CNBC with morning think remains released on survey pretty saying we are was

think coming that, increase the you would in repairment for the down. that conditioning prices year auto go we to would I a trucks CNBC revenues rolling or purchases, I think the And GDP you're in that kind their only fact revenues of the any are affects are surveyed on just last cuts issue inflation XX%,we have whatever. we the if think we this or in weekly maybe folks tell of in and of to about I X% or energy kind point, that the plumbers, LAP of expect in benefits themselves wages tax way probably the marketplaces. year of single-digits. - in any businesses our And tax, and local basis Goldilocks growth I kind talked a GDP economy, of have of the but businesses, pinch seen one air or expected at this not seeing nominal continued other or

there spike I handsomely a prices any I peace we but But horizon, any, particular year. energy as don't spike. made in think their that the storm clouds which energy pretty characterize and, were are the prices, see last a wouldn't on people up unless with that have over

ago at confidence is pretty internally even we local the at talk our quarters looking Street, they're much the again, So in Tier terms their ago over trending to is X anybody the and and level think I'm else improved dealers a going auto more level high. just fourth we of year quarter. retail two probably trending pacing level over and Main and And back

Operator

question comes Barrington next Jim Research. Goss with from our And

Jim Goss

the met comment you're you stations about you And earlier if spent you one gross sense, to net could I'm Baird. that in Perry, affiliate there interesting a take how made the acquiring provide an you Tribune of wondering get. have any CW,

In terms the bump get so mix, of a your to add revenue prior with to retrans part of system. being

Perry Sook

have I we Not really if obviously to James. results. answer sure how that their mean know, you

of of million my that the portfolio. announced and have network retrans We part synergies and lot a in $XX is again CW coming from their

as retrans results that than better theirs, gross already reiterated margin revenue sure So reaffirm a beyond and much guidance the we've we we've growth, again, really But revenue, given. would prudent obviously I'm on be just comment I not will can basis. that. and But to much don't do know. net free our only We cash it's say and revenue that not guidance retrans that than more flow, a

Jim Goss

sort And to then a concentration of the are to M&A developing you separate that of any or that area, unless or you versus focused you are station more do you refining you'd would country the small think you continue the limits, of that do certain properties your an an of you, and ownership in looking terms geographic the acquire? context, stations continual mix in determination in large M&A to that you part what change on network mix, a whatever be our your biases in be there of wanting either be have interest and parts is extent in or interest have, might would of have Sunbelt

Perry Sook

would CBS and our is look pre-Tribune, about from by myNet CW, XX% the of contributions, other today if revenue XX%. portfolio say about NBC, and our is the XX% it's accretion that ABC XX% about you XX% Fox about comes driven acquisition. Obviously I at others.

change higher diversified we're of So on it's country. portfolio box in CW that the we're we're whole down contribution the more in a pushed XXX minor those percent well pretty the a which of percentages higher XXX not of contribution as some with markets some that And with mix markets and will Tribune. other will a

where So stations geography. again, to, and growth that accretion to for deals any combination we're But pretty And think think the make able green. the good our of is And fully distributed accretion. we'll almost and and in shareholders. is all of work from are by I go region money perspective, our we've terms I been

So can this real we'll And us. opportunistic our run make forward. will for acquisitions is continue we to same opportunity going that there create change on playbook more whatever point a from

Operator

from with Griffin Bank. Clay question And Deutsche our next comes

Clay Griffin

up on follow just the… could I

Perry Sook

please. can you Clay, speak up

Clay Griffin

you Sure. Can me. hear

Perry Sook

Just barely. Go ahead.

Clay Griffin

Okay.

just you mean, revenue are to that at changes affiliation implying to bringing or the those Sorry, acquired just when benefit CW affiliation affiliation well also MyNet side that Perry, benefits clauses agreements those specific the in comment about on you but on clarify, to agreements pretty there I and agreement as broadly but when it inheriting the comment, the you're maybe if Thanks. that you wanted stations maybe are on you the that acquire you could there are as is, is are those those clear, and extent stations. elements step that guess, the I into from is retrans retrans

Perry Sook

take their towards is has higher stand the agreement the difference I'll mix in and more one stations twofold, is that a assume margin We which their shoes. of then heavily short-term much of that CW for Tribune Clay. agreements because recent with networks rather of and M&A they weighted is given of The the or their with on the that. side, did And number affiliates affiliations. sell legacy also the activity Tribune one. with

we not we'll Tribune. first Nexstar that's will think scale a get the So the of up, when because combined those be renegotiating businesses of the number those agreements real come benefit affiliation and of

for agreements. that we that And new margin those allow think to maximize us so retrans will the net

and And twofold, it's back one renegotiate maturities affiliation of to is the two that which mix. on we'll fall Tribune's at agreement is negotiation of So not those the have Tribune, then is sequence to really responsive? get

Operator

with next Wells our And Davis Hebert from Instructions] [Operator question comes Securities. Fargo

Davis Hebert

a market the opportunistic mentioned question Tribune capital would expanding looking Tom, quick at include in raise, you opportunity also the Just XX set the to that anticipate for being you maturities.

Tom Carter

Nothing the table. is off

Perry Sook

time as you in morning. three on the for quarter for progress as second getting of much towards this We well and Tribune our us Thank very completion the today forward months' together progress call reporting to look acquisition. joining our

We'll today. time your for soon. you much again very you thank talk to So

Operator

today's Thank you, ladies and gentlemen, concludes teleconference. this

now may disconnect. You

Nexstar Media (NXST) 8 May 192019 Q1 Earnings call transcript