NXST - Earnings call transcript Q4 2019 | Nexstar Media Group, Inc.

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Operator

Good day, and welcome to our Nexstar Media Group 2019 Fourth Quarter Earnings Conference Call. Today’s conference is being recorded. I would now like to turn the conference over to Joseph Jaffoni. Please go ahead, sir.

Joseph Jaffoni

Thank you, Travis, and good morning, everyone, and thank you for joining Nexstar Media Group’s 2019 fourth quarter conference call. harbor your which questions safe management’s get some and commentary and read language, we’ll after to I’ll answers.

be during cause forward-looking by differ to materially of All management those reflected statements XXXX. these Securities fact, Litigation statements subject of the risks during results by statements statements Nexstar may cautions historical today’s and conference Reform purposes and call, other Private comments actual to of forward-looking deemed forward-looking made the statements made for Act the are that uncertainties call. that may from than

additional subsequent a with uncertainties, XX-K revise annual For XX, details December Tribune information, of annual Securities see on year obligation for the each Form the and these Exchange XX, Form undertakes December as and please or the future to on on or Commission. update and of whether Tribune result ended Nexstar’s Media’s risks public report XXXX, statements, filings report Nexstar no ended otherwise. XXXX, new Nexstar’s events for forward-looking Media XX-K any and year

my to With Perry now Chief Perry, Officer, over ahead. Chairman, President pleasure host, it’s turn and Executive call the Sook. go please to that, your conference Nexstar

Perry Sook

transactions, most us and good reduction completion Thank agreements morning, leverage station Thank of our you, Joseph, of and review consent you today for new return retransmission our Nexstar’s complete of the everyone. our capital the strategic operations, initiatives. recent joining integration to multiyear nearly quarter, fourth recent and Tribune Media

generate reduce shareholder and growth already active total focus returns. leverage to significant our to our the operational XXXX, drive on excellence positioned supremely together, cycle flow our and and free cash entered leverage Nexstar Taken materially political scale,

with its history. Officer, morning. Financial as a in remarkable Our Tom this is period XX-year Chief Nexstar for always Carter, XXXX was me

As value financing, a new, shareholders. and and our year, integration, long-term near we broad for to operating M&A the strategies deployed of proven range other create throughout

with of acquisition combined now largest approximately that a station would operated traffic Comscore. information for highly the cash America. and site truly television and we broadcast cash news meaningful our with mid-September, ranked Tribune and nine-digit owned and accretive Food from benefits group XX television U.S. coverage, the stake stations Media, In from nation’s by households web our closed TV network, free and as the Nexstar and WGN positive transaction or creating profile flow U.S. reach our million also be national cable The contributions network reaching visibility our XX.X% flow from ownership top national consistent

and Tribune integrate growth held our teams to into we closing, to full front our And from of realized synergy approximately to that all or $XXX the reach our we’ve of Media before and million many acted the we exceed QX. on million the the guidance we to portfolio. Nexstar’s and Operationally, end At fully put increased relevant throughout $XXX approximately promise expand quickly to we million. target, have expect line nearly $XXX date, best platform the capitalize see assets on to local opportunities the programming

sales four Since executives corporate XX four executives manage closing, presidents vice promoted support acquisition, we’ve to to managers, hired content expanded named senior and and finance or WGNA, regional we two corporate operations, general our distribution, communications. department and

and a talented integrity, common innovation members commitment growth. nation team Today, to of localism, across united than is the America, XX,XXX Nexstar more comprised by

our entered our and future digital drive Television; network and purchase we retransmission deleveraging multiyear to the entered XX% NBC; affiliation also agreements new into businesses CBS, agreements, representing and of FOX agreements subscribers; approximately into and profitability. growth with long-term new During with FOX year, consent sale completed realigned

double-digit approximately count of for compared flow million Bowl of on $X.XX distribution of best $X.XXX $XX.XX common Tribune flow XX.X revenue That’s our average class coupled cycle including expects outstanding on to NBC, organization, former between free with XXXX/XXXX expected forma spending, generate per cycle of on free A increase the shares. the share Summer of billion of basic the an average Nexstar or pro key sharing factors, share forma and practices to XXXX continued annual growth and cash record Super the our annual pro over billion. based levels the Olympic With election XXXX XX% for guidance cash Nexstar Fox, cycle of

our proceeds closing will our net With operations priority meaningful out, reinforces the Nexstar’s agreements Our robust our leverage come and way strategy Xx for now the post bolstered have in reducing excellence, as be all which the ratio year. of together free to in well guidance below or as two proud this of of Tribune the organizations reflected our passion is is purchase recent I’m from cash playing end flow and from by new confidence sale the enterprise-wide attaining by integration of XXXX professional

news programming we in our markets, local in while Capitol On a Missouri. of promised, Sacramento programming as and the front, expanded state launching Bureau local new Portland the

XXXX which XX for million television households U.S. launch WGN reach Nation, America and will will mobile news app, We newnationnow.com. the our of Primetime complemented around-the-clock approximately the Summer News began new be also preparations by National Newscast,

around network will X,XXX and news more and local Nation Nexstar’s journalists, cable expertise resources country. local any leverage is local other broadcaster than of market XXX the rooms the News which regional and

By attractive with or reallocating towards from information advertisers. financial News bias and intend programming without resources solutions fact-based for delivering to viewers while news Nation, national WGN opinion, marketing provide we syndicated

for we profitability and our long-term year political the XXXX fourth off-cycle period consensus while expectations, with another extending the delivering further quarter of shareholder end record of performance top Nexstar’s enhanced results line, as operating outstanding cash mark exceeding flow metrics financial record returns. delivered an of company year

the $XX.X XX.X purchase opportunistically $XXX.XX share XXXX, class price million fourth the allocated from of Nexstar $XX.X form During we count per XXX,XXX shares to shares share at average our A to an year-end. in at of reduced repurchasing outstanding cash And common returned operations of basic dividends. shareholders we quarter, million million in to approximately which

financial near growth free debt of business our quarterly addition provided us share same additional last has initiatives, of with and our time, investments. this support capital of the our including return dividend to Directors flow structure At leverage payments, approved per cash Board active the the in share strategic flexibility and the our dividend capital repurchases, to seventh X.X% free some reduction management in cash space, repurchases, in reduction to cap To month, instances, the point, a $X.XX this increase we and some or believe up consecutive national strategic first completing growth dividend. marking previously markets cash markets Tribune generate optimize saw we very rise to us the beginning ownership in can cap, position and noted the to share quarter, and We we but were to continue our in the portfolio opportunity we transaction, upon upside. greater new our where annual

of regard, a announced transactions set QX, in Fox. In we this station with

– in addition receive to result million to near approximately strategic this contribute In the significantly term after our transaction quarter. will to of as later benefit those this the the which delever proceeds, transactions, ability Fox the we will of tax $XXX

are long-term network half percentage growth expectations of our XXXX, in the contracted and new of affiliation XX% XXXX, with over low are and through XX NBC. result, in second respect agreements affiliations FOX our into a December And over retransmission a four now net of range CBS, big With XXXX, contracted XX, XX% affiliations mid-teens to through December as to we big entered of in our XXXX. for four the

and base beyond. renewals, subscriber approximately and taken clear for At distribution affiliation and retransmission XX% retrans of new the us time, we visibility our OTT also in provide retrans contract revenue expectations same agreements the with addressing our successfully net renewals, contracts which finalized growth our new together XXXX uniquely include

growth reflecting nonpolitical assets, operations quarter in including growth sources, and and to of first results the fourth core quarter. Tribune the during quarterly legacy delivered former strength contribution all we of our advertising organic the our Media from continued revenue in Turning full the Nexstar’s double-digit

rise $X.X distribution fourth a gains, fee XX.X% Transaction-related record in the Nexstar. of million of to decline revenue drove revenue renewals, net quarterly distribution political a year-over-year a and inclusion to in WGN the quarterly revenue America XX.X% the digital XX.X% despite $XX.X for in For also was a XX.X% increase to $XXX.X record billion, million recent and advertising. quarter, revenue including rose

early candidates than levels. parties spending gubernatorial space, both key in fourth scale in in expanded presidential comparable our of fourth with by more quarter quarter spending of XXXX Notably, primary political record and million combined revenue the active double the or year fourth resulted quarter, odd $XX.X

basis, revenue X.X% political core top our of ad QX a revenue, rise net approximately categories up on ad to of same-station XXXX, our which In revenue. were XX%. fourth led would have quarter Excluding XX XX a in same-station increased

of That’s and see ad new over plans. basis, Nexstar and levels to metric Nexstar we adopt our XXXX addition, as year-over-year teams quarterly on television new in sequential stations local year, sales continue revenue Nexstar’s a X% and new initiatives this QX year-over-year more revenue television former to sales generated rise the revenue. generate new advertising upside QX we fully of healthy our rising basis, to In incentive in with revenue the prior sales quarterly to million sequential a disciplines, television transitioned $XX.X both Tribune their business and our to

spending the levels around of ad and respect category our advent the healthy continued political, With proposition candidates had the as and country. of new issue stronger-than-anticipated gubernatorial and our presidential fastest-growing the for in pack the as race Louisiana fourth entering exceeded well budgets race from to benefited of spending quarter spending

quarter year million in related accounted new contracts. ad year-over-year in of and fourth to consent the revenue XX.X% prior in revenue fee over of the for legacy period. in distribution net fourth half year our combined the period approximately to prior digital quarter revenue Tribune agreements retransmission revenue $XXX second net Media The gains of increase of Total reached compared and XX% XXXX after-acquired revenue nontelevision the clauses reflects and the distribution rose XX.X%

carriage with net in our of this be Also revenue growth will revenue approximately XX% we��re our added significant America success political WGN operations. complement our XX% also to base of and approximately strong subscriber XXXX of in growth With renewal year. retrans in the is our realigned XXXX seeing the digital renewed XXXX, the base

leverage strong targets core political and towards we meeting distribution noted off is in terms QX. progress a of in meaningful our further gains, to revenue I make to expect As start XXXX and earlier,

Our to quarter count, in in our free share better shareholders cash positioned is fourth we we reduce shareholder-friendly reflected share our recent increase to even will dividend other as repurchases our be commitment initiatives. and allocate to the leverage and flow

investment community you this with regarding with morning. points borne is and focus Our that value two creating in to our unrelenting out dialogue share shareholder data ongoing near- long-term proud the on I’m

top XX and of As stocks last stocks, XX%, universe a XXXX outpacing as ranked return using shareholder X,XXX%. overall total over by shareholder the the its performing total XXXX market. a return reported of delivered Kiplinger the of with the of Nexstar we fifth decade In clearly alone, Russell

morning So started activities is these while that XXXX, by initiatives points data my to in I this a phase beginning our I the next company XXXX reviewing shareholders growth we of underscore believe significant comments our shareholders. managed establish in and Nexstar for undertook fact

update. over turn that, call Tom the and Tom? the With for to I’ll financial review

Tom Carter

and everyone. good Thanks, Perry, morning,

As full Media XX, press, also outlined the on Fourth operations acquired from quarter and XXXX actual three Tribune XX, and page in the core we months in “Income included the this in quarter America, Company’s XXXX. is other or ended for XXXX in A WGN legacy contribution and XX.X% results which quarter the and fee from acquired revenue September transaction investments, full Nexstar equity reflect ownership is morning’s the transaction, Broadcasting stake December results investments net. stations in included Food Tribune Nexstar’s revenue X in income Tribune Network the full TV revenue. advertising from distribution on under the on loss statement acquired digital

Nexstar’s in ended XX, digital respectively. $X.X December period and The reflects actual broadcasting the reflect and million month comparable XXXX, operations. of of All of million transaction herein XXXX legacy $XX expenses quarters results three December presented the incurred and XXXX impact onetime XX,

after statement capital revenue compared advertising in net XXXX. and structure review With points start on a sheet the largely a pro company or and same-station million, $XXX our of fourth million and as of the data, with down income $XXX due which the forma balance quarter reduction basis combined XX.X% update for I’ll that, divested Nexstar’s some fourth provide fourth to political guidance. stations, quarter to an On of quarter I’ll was

products. of core continued was up deemphasizing same-station same-station X.X% X.X%, XX.X% was profitable distribution up digital revenues Same-station our to and on basis a marginally advertising fee basis, due business nonprofitable and were continuing on revenue down a

On side, was however, a up station same-station the digital XX.X% local on basis. website revenue

X.X% Fourth the same-station a of impact our net rising related in pro the revenue, station forma budgeted up expense up basis. the quarter $XXX Tribune trade from and prior operating Total approximately increase on growth expenses as million, expense quarter were direct $XXX in to was year, affiliation reflecting net excluding million offset full to network of in expenses distribution the incremental revenue. partially operations political,

pro were take reduction our hold. previous cost down programming expenses, Same-station begin fixed year excluding over as to forma expenses, the efforts X.X%

Fourth million. the quarter on $XX $XXX of operations, $XX was quarter and while approximately stock-based which onetime the guidance came $XX the quarter noncash excluding comp million, of to station expenses, When SG&A expense comp fourth were $X.X onetime call of expenses. better transaction related Tribune million million expenses than was million inclusive approximately our and provided transaction $XX approximately we in of corporate million, third of corporate recurring

operating related cap totaled taxes expenses, million, million I’m associated ongoing while CapEx operating $XX during Tribune million integration $XX.X is Tribune that with expenses to quarter. and were conversion transaction the cash sorry, Included – CapEx million quarter in $XX.X $XX.X station system the $XX.X and Fourth transitions million.

on was CapEx offset from reimbursements Spectrum-related $XX.X government by of program. million partially million, $XX FCC approximately which repack the totaled the

reminder, all CapEx of the the over expectations for $XX our anticipate a spectrum approximately million. CapEx we fully of repack-related course year. reimbursed quarter came with Fourth consistent in initial As being

$XXX.X in million from interest million with the to $XXX.X year. Fourth interest compared the approximately in expense $XX to last cash $XX total of million, quarter year, prior amounted million up

second and $XXX executed debt of the reflect renewals this, cash for and free cash broadcast the consensus of incurred All agreement primarily million million Fourth quarter of XXXX. $XXX $XXX is associated Tribune well as growth with of obviously, adjusted in expectations pre-transaction half and transaction. of expenses, flow transaction-related as the million, exceeding distribution EBITDA

cost combined $XX corporate stock is which $XX first is of transaction September remainder comp XXXX. of approximately provided guidance of year. the for $XXX a run for for million approximately expected and consistent first approximately achieve to project million to cash recurring rate ahead Looking track million for Tribune the on million expenses closing million for year-end, we with we’re we by of and transaction company, exclusive overhead, corporate be quarter, the to will approximately decline the the and upon $XX comp be the in year. $XX quarter million the quarter of full Noncash $XX Transaction the the will and during overhead

we’re taxes approximately cash and to $XX our estimated operating year. of quarter are for First be approximately million guidance million, full $XXX prior reiterating the

First full WGN for approximately million launch above our the new to News to onetime expected slightly for which $XX should build-out studios $XXX Nation, Newscast, quarter of in and time this come due the associated capital guidance is at year, America’s national is summer. million Prime which CapEx with initial

less provided the during full first anticipated than to an our in million and quarter previously improvement expect we guidance expense million reductions cash debt due the year, $XXX to Finally, the $XX year. approximately Nexstar’s interest for for

XX/XX/XXXX Total at X.XX first net covenant lien was of versus was a the and leverage X.XX. covenant X.XXx,

expect approximately to station throughout Fox leverage which $XXX the year. net one two near purchase in debt expect will available close expect on and in we consistently the of And company the we to reduction that We which vein, for from to of the sale a future, cash, stations of Fox the reduce million use

reflecting Net to debt, of the period last to billion Tribune billion the $X.XX transaction. the financing before, mentioned of at increased as I $X.XX in XX/XX, same year, compared

our approximately maturities million, $X.XX capital $XXX we the with terms Tribune principal X.XXX% issued of notes extend as of and a notes took XXXX, aggregate a the were senior part as in These to During XXXX. due further existing due of billion notes completed quarter, of the offering X.XXX% cost also we financing. same as the lower actions fourth amount our

to and Notes in redeem on Senior were fees pay X.XXX% hand, also The due with expenses. to X.XXX% due related XXXX XXXX and cash net proceeds, together used and offering Nexstar’s premiums,

most of markets, our the time, nearest at unsecured debt pieces debt bonds we leverage. to pieces By bonds able have our expensive materially XXXX, am accessing and total sorry, unsecured the of our opportunistically term I net were – retire now due which are most expensive we capital in will near-term and reduced

demonstrated Today, flexibilities. capital use weighs structure and our Nexstar to fixed has amount cost weighted rates shareholder of average of and consistently prepayment of prudent of value. its and proper leverage ability the attractive and to strategies source attractive support and enhancement at our capital refinancing floating debt growth and capital the for

improvements, balance the in through cash capital free invest broadcast while sheet of platform, return to to initiatives. structure addition value our leveraged generation and enhancing strong leverage and technology capital reduction Nexstar flow our In and the shareholder

we for year, $XXX.XX. to stock we XXX,XXX returned average In year-end. cash excess shares at allocated purchase in the $XX.X an of $XX shareholders in at basic the form this the of shares price million regard, to XX.X of opportunistically quarter, and, That common dividends from million of our slightly to in A of class Nexstar’s outstanding count share million reduced operations repurchase fourth

manner the employees. cash of we capital for while terms in for that significant has business, our substantial allocate value a the to delivered company our strategically our in resulted also programming growth and free allocation, local reinvesting In in and continue shareholders, flow our

of At quarterly at tripling three were million transformative $XXX share returned repurchases to the and same of last company. million over form nearly the $XXX in allocated free the we size cash we’ve opportunistic towards to years, that tremendously prices the time, two have shareholders attractive accretive completed transactions Over the dividends. cash approximately

substantial to election excellent many we upcoming to double-digit ahead, revenue have visibility distribution growth on flow XXXX cash free – to delevering the targets. and cycle, with spending expect relating continued be delivering what in our to Looking presidential

excess the basic $X.XXX forma annual guidance pro flow the our remain XX/XX/XXXX. free cycle reduced XXXX/XXXX $XX.XX XX% Nexstar we average marking significant For pro of to reduction XXXX leverage And of Xx and per free forma cash pro in compared annual billion average of flow a XXXX, forma cycle, to of upsized billion. – confident in share, portion leverage cash additionally, allocating increase guidance reaching generate flow or dividend, cash to committed over our to free to $X.XX target expects to by recently are of our our an than less towards

realization integration, local a results; our shape are has from in never synergy ability operation structure and address summary, generating In maturity capital of to and quickly and national advertisers is stronger. plans our and communities local to been our great our capital service and leverage; cost

Our disciplines to growth in consistency results. these driven as areas well as our significant have and visibility

we an review the ability That shareholders. to value in such, increased XXXX, us deliver enter transaction remain of with to eye As Tribune enable the will capital on concludes for of to call. return confident the level through which towards to XXXX our financial

And remarks closing over to turn some now Perry before back for it I’ll Q&A.

Perry Sook

Thank Tom. you,

Tribune great the high the closing value of fortify create expectations since for results for has Our transaction to will shareholders. have served the this and Nexstar transaction

scale, and which and XX-plus us past generate the successfully media portfolio integrated from we remain enabled M&A separate our today’s our diversified transactions, technology growing shareholders completed, value in have have for ecosystem. XX competitive to years, highly increased Over and

transaction terms transaction driving in the to and flow cash be best our standpoint, Tribune free date biggest of accretion. From shareholder our will significant

we long-term from value enable time-proven with service investing our our focus, our our aggressively flow reducing combined record to and of leverage, and advertisers. shareholder strategies, improve are while team and will to viewers in cash to operations, members of our creation. and free business This to extend us strong significant return increase operating our integration stockholders, our we to the intend capital Given

interest, We joining today. of for behalf to management continued on you and and us than and employees XXXX. the accomplishments thank look nation growth more throughout team, support XX,XXX the for forward your reporting Nexstar our And on continued of our

specific of now areas So Q&A open Operator? to address let’s the your call interest. to

Operator

Thank first Fargo. from Instructions] Our question Cahall, comes you. [Operator Steven Wells

Steven Cahall

being to free retrans flow XXXX? the XXXX cash Maybe with first, in include due your on flow that new Tom, or the the to guidance does than cash expectations any like you. guidance free cash implied XXXX net XXXX guide, for about XXXX/XXXX higher interest? is Or really increase Thank over

Tom Carter

of disposition clearly, and XXXX increase majority of from the of because the the obviously, the end majority difference between But which it last the slight say, retransmission final is would agreements year, do XXXX. between I affect XXXX increase in XXXX. comes and XXXX of the positively that of at happens There a XXXX.

Steven Cahall

was on is below I’ll forma to you could, down, I I Okay. your just of your number $XXX on of a think percent all pro what able Michael I also thus of be if is what from percent number political, you sort it’s pin might Any XXXX And And realize figured or revenue sense little million. then maybe try increase XXXX know far you Bloomberg. wondering if to that? I

Tom Carter

answer I’ll question. the take I’ll – first

comparable sample The year. of given forma relative less low the so while it’s station small the again, it’s a to things positive, far relatively out XXXX come be the same will from teens pro correct. and we have first think quarter percentage million. You’re that where than $XXX will entire size we slightly And

political above advertising guidance includes high levels. growth in and single-digit expecting XXXX a We’re the

Perry Sook

a game we now. there’s in November offset quarter the played is And where some candidate before but as on money, to be it’s and money months lead XX% because his because the the good Bloomberg, As our our – realized. That’s that’s it relates revenue there’s portion spending year for first sidelines the to pack again political of probably two of XX% will think Tom the said, of right some election.

strong very a start. So we’re off to

first quarter overall sample But our again, the scheme in it’s the says, made budget as to a relatively size quarter the political year. yesterday. we things, small Tom for fact, In of

Steven Cahall

to leverage you lot last one deleverage And that the once don’t me, I’m hit guessing have then of or four you appetite below, of for further. target a times

cap. far too the You’re from not

cash a back shareholders we to kind about going of of free be should thereafter? mean, thinking XXX% flow I So,

Perry Sook

but quarter, I topic our seeing to regard free – efficiently think that. several in I we at a aggressive, tell may and reasonable return into of to capital we do before situation more flow shareholders. to shareholder certainly bit and like what be it way we wait, we’re day But opportunities support. not I And would allocate we – shareholder will hands would we’re another any get say believe fourth you of meetings cash for can shareholders. XXX% to not experienced returns, board our as that’s with along sort to be of If we the going to and there’s have the in to to allocate some capital additional a

Steven Cahall

you. Thank Great.

Operator

comes Watts, Our Deutsche Bank. next Aaron question from

Aaron Watts

It is thanks that? you there the Can guys, auto having bit me advertising. good core little you’re the quarter And also then seeing first a talk was like too? how far fourth what auto how so performing a on. for Hey for quarter in and for underlying sounds performed it core in

Perry Sook

that television the you stations. the say that quarter, on spending a was about would down was terms the basis two single And performance same the years. relative quarter in its tell in in can of which auto first I of I fourth digits on auto are trends lowest best

Aaron Watts

quarter? And to the the is then you how fourth overall look Perry, more broadly, in relative growth core saw X.X%

Perry Sook

Super than political with budgeted first of kind But job are in the that the end than advertising did There’s being Well, more the a I great maybe Bowl to think on we same that. probably we a less trajectory, up little affiliates. our Fox quarter. going on

Kansas XX Kansas the business, a Fox our City XX% airing a it fourth XX% the never the which being game I’ve fact, years City of in of In share. station heard had audience, share quarter in station, of my in

broadcast obviously for big still local people television watch and events news. So

And so be but the bit think expectations. quarter, fourth lower X.X%, within growth our might we than in certainly budgeted first X.X%, had quarter same-station our trajectory the I a little

Perry Sook

the other X% were curious And doing. we’re still what

Aaron Watts

changes terms a base fourth Yes, about seeing you exactly. of the MVPD you distribution the bit were quarter, what Separately, underlying in in in can there? your talk little subscriber

Perry Sook

for is same-station talk basis, I Sure. actually a last going subs quarter losses Tribune for that results. included about are that XX on consolidated And appreciate Fourth stations the subscriber significant we’re time And isolate And our to and if today in in including our and question. try last that year, down we’re X.X%. first the in a for Tribune, ex including a two-month what months period blackout out it is X.X%. that on X.X% down laser you and Obviously legacy that out, and the was Nexstar QX. those the

well the We’re different in a happy with but cetera, those and results. composition, little Tribune subscriber did than OTT, of of those terms Nexstar combined et bit expectations portfolio a performance. has are within parameters our for

Aaron Watts

the with MVPDs the that’s balancing And traditional contribution today? over-the-top

Tom Carter

total about think yes. should You subscribers, that as

Aaron Watts

great. Okay, helpful. That’s

Tom Carter

in continue – offsets subscribers. traditional see Again significant growth we’re the seeing growth significant to in more – OTT, which partially the MVPD in decline

Aaron Watts

Thank okay. the for time. you Understood,

Operator

Dan Company. from comes Benchmark Our next Kurnos, question

Dan Kurnos

usual, morning. guys. good as Nice print Thanks

I of kind that launch, then color And up invest first Perry, smaller, bit expand Nation little News thoughts can a maybe don’t how relates for the to Just, there want on forward then it to know, of differences given you that market composition that just WGNA? as And more Tom, in probably market, just difference in be of just you your just the is just little down portfolio, large on are small of Tribune and about going that us, bit half. in geographic, bit either terms if a a help a maybe that, obviously, bit sub-counts. how more digging little but it’d thinking little

Tom Carter

first Nation of and content we a which It to others. WGN allow will us property America Sure. rent of it I none content gives app, develop will us from Now we currently today. own to mean, that content have that all, as to has opposed robust intellectual News

we uptake adds buying companies network. equation and and that simply And time. of WGNA category we part rates introduced in we’ve the obviously distribution So carriage financials, know and that it think and a to the other on terms weren’t of tech, value advertisers, the whole over of

at double so – to our Our first a to and non company, current was sale CPM. a financial

channel increase the which a So onetime this obviously funded it’s roll if realized it’s expense. news year the syndicated – WGNA. national except self Chicago. by value being program expense this for infrastructure certain in of the and the for to to of And the CapEx, continues going because network operating liquidating off work, building be as out that the will expenses But are

basically be So internally in OpEx. the growth there will big a financed and not increase self

none stations, As carried arrears. the Tribune acquisition. of get on it reports to don’t closed think, kind we big you And as were the subscribers, until a four relates I that affiliates is to we we important OTT on have sub thing the yet of those out new counts settled know, because again, any in platform note normal

So this January we won’t until stations phased. four looked like. were didn’t We after some XXXX. on what fourth with OTT And those Tribune ultimately of launches quarter get the quarter until of to know turn the the of the platforms again calendar later big

So it before will it be a little while out. settles

note experiencing experienced. guidance think, we than important I it’s and are count again, sub what that implies our greater erosion have just to

So should take comfort people in that.

Perry Sook

growth Perry close OTT honestly, of about legacy the attrition with largely that’s we’ll And providers. for satellite That is To right. recapture Tribune number portfolio their we moderate the of the mentioned, to in are like OTT the exactly that see platforms, closer right that traditional some perspective, between some total there. of I as differences The of weren’t subscribers on four we lost gap, Nexstar’s I or as say that subscribers X% from X%, are would Tribune as Nexstar think, affiliates moderate the launch big put now. and

Dan Kurnos

Got it. you. Thank Super helpful guys.

Operator

Kyle Stephens. from comes question next Evans, Our

Kyle Evans

us Hi, peers a net as indicator call a where came relations. good of We from network your of away retrans walked margins just one morning. Thanks. off

renewed across back I fours. high Board step Perry, with relations? take you big a your and think a network the kind second view of give you’re could of us level and

Perry Sook

in press Well, we expect distribution a our think, prepared to XXXX. our remarks said increase that margin I we release in in and low mid-teens the in

said what what And support internally. by to points have stand data written. that we’ll we So obviously and the was was

Kyle Evans

in A mid-teen low to margin? increase distribution

Tom Carter

margin. in distribution dollars, No the net not

Kyle Evans

it. margin. net it, Got Got

Tom Carter

Yes.

Kyle Evans

it. got growth, Net

headwinds to some maybe sounds us very just that we’re side piece digital the for weathering it as Tom, Okay. that? annualize size like local of TV.com, digital going the us when Digital on is Can kind of the business. we’ve National station And you well. been remind strong,

Tom Carter

continue variability see think, National on to The Digital piece, that. I Sure. some you’ll

a deemphasized had. platform largely we that recently have We social

kept have elements that the of not business but that of majority We business.

here, So I mentioned pace – comprised the kind digital to basis at, in – which almost the a I that businesses, as I – continue fourth that is real And bump two it’s comparable that see of during news would is the on prior continuing local to years. slightly total flat XX% see think year. say continues quarter. of continuing along continuing business, the you’ll we grow cadence obviously digital, that to down between good again, to

is seeing being Digital prior National negative we’re deemphasized, business The obviously and years. comps to

quarters. will or So to to to I basis flat going that think two more you’re on that slightly see three for a be combined continue down probably

Perry Sook

half News of back Nation because app quarters contributing – by digital our now will two the probably WGNA’s is the to when results. year begin Yes,

albeit positive think not reported that margin. in of business significant a out of have ultimate results see off increases, history burgeoning will base. have inning year. we’re of eighth that transitioning or because you’ll I of to transition, low obviously businesses the the up is a double-digit digital But again this the it, We against throughout the But will out that think, data run little Tribune seventh growing no we’re be these add I the

Tom Carter

providers the have course access it of made years inventory businesses over to large those of really some changed have difficult resold. service we that couple last as had more historically the And have of the

now business. was and reseller a marginal business lower a the seeing it’s margin margin business always We’re

Kyle Evans

quick question number that bottoms-up models. it. with One you for trying us those Got of are housekeeping share sub count to a total retrans build Could us?

Perry Sook

not. do We

Tom Carter

No.

Kyle Evans

I Okay. shot. I’d All give right. a it thought

Tom Carter

nice try. Yes,

Operator

Jim next Barrington Our Goss, question Research. from comes

Jim Goss

markets reach them. extend cable to either million or Okay. it of couple – you be to nature. that buying a as do or WGNA, right the, One little do something XX now you to more by another beyond was said, bit it Thanks. household a platform you compliment on trying the it on existing A it intended of envision a to is put

Perry Sook

see as Discovery a combination in in cooking current our investments beyond invest with think asset it company. we’ll us is assets. I of channel don’t and who the you’ll in manages the network think I existing those WGNA food

We’re on and relative, have there. passive participant our It’s primetime. But seat a – XX.X but shareholder XX.X% shareholder board, programming the program going to we’re a counter strategy.

on. entertainment, in for will late not that pages successful. time nights think advertisers shows. sports if we we’re timing entirely And good, appetite But three nationally in networks we in a can repeated got is in We other focused this news. week channel interest point, an no had be night. we’ve is seven prior. it grow at the are that’s It’ll prime but only the or to And that now talk either what opinion entertainment, see All news, of

And ring of out And foremost that’s existing and growth job are so and we is create our to our value focused first what assets. on.

Tom Carter

value will and potentially product doing. be America more that will to see to way And the WGN can is value their that’s we distribution what the their and we that better. do because best more we’re think see that, is MVPDs consumers simply the because relevant The programming able and grow it When in make then we unique. it customers expand will in the its

Jim Goss

with way I into complications back channel. recall there were rights getting Okay. cable issue even programming always Tribune, the to

pretty other the much the be as So all as entertainment I much of in more not gather news focus dayparts to you’re and a time going well?

Perry Sook

basic programming it it XXX% was significant to And think back about still has converted been were have I a superstation rights Well, a issues when were cable commitments. we the you network. talking

have the the will the the can we a And happens of on journalists before X,XXX we’ll we universe. is else form around of So in get our that plane and play charter country to Again, story the be backbone beauty in. parachute there reporting. that this where anybody ground

the have local we’ll And context.

But the will source and Newscast. for where in the areas to fill Chicago, hopefully XXX white stations material in to but we to plus network news local also and to the right. television this The it’s hiring presence compose ways, a both produce work will the time national our station look a over provide on only up national that bottoms news present we’re become individuals Now not basis use we will may have not stations.

If you obviously Nation subscribe not back News to And exclusive. our you’re stations. can CNN, be content exclusive to video

head talking could may Lyons Jen third manning party provide and are the we providers to and news that us video Sean us this that international who And for up channel effort want. to news effort this are

so And are ongoing. talks those

Jim Goss

Okay. practices Maybe could existing Tribune’s question. final out best broader one Are that of any extend platform? there a coming to operations Nexstar

Perry Sook

of necessarily that mean, don’t I certain wear Absolutely, ideas is uniform. this good beauty a the

So sharing we’re stations. the are The best with with practices acquired best sharing stations their practices us. our acquired

do. terms the staff things a the Nexstar Tribune we’ve around [indiscernible] to activities are inclusion that company that concept best in idea. and and our of hiring diversity And process, where council, from pulling that and expanding our that in a taken our of on will we was create quantify started that of we One and of practices is in and are Tribune diversity kind people in things the

that we’ve just practice over a that’s one the company. best into traveled So combined example of

Tom Carter

of side Philadelphia in in those majority or from is people retrans one other based and the It’s the side side, an as people. we deeper distribution of bench our properties. retained vast mention I those XX of my well And world of as administration actual contractual for management is the XX all negotiation Tribune of would them. of Also have affiliation fees and contracts all from again, financial and that of the a carriage of as well as administration an

Jim Goss

Perry. Thanks right. Thanks All Tom.

Operator

question Craig Huber next Huber, from Research Our comes Partners.

Craig Huber

say the less first revenue questions. clarification, or I quarter. tracking were ad just the up fourth quarter extra for X.X% you Yes, was little for got think, to core than, good morning. I a a Perry, said few the you X.X% trying

Perry Sook

think I than fair lower trajectory that. a assessment. It’s that’s slightly

Craig Huber

there? just And nothing early concerns this there any just advertiser comes see pullback in some Perry, markets If give any you and it’s know your sense, various early talking here coming there’s it’s and U.S. too up speculate? out the on all Any But and of I have. might a from to advertisers that. or where you in just about various it. out issues lot angst to obviously the know with coronavirus hopefully, all

Perry Sook

of can advertisers absolutely people. your the handed things quarantined a We’ve of if benefit you’re is you television, back see In think do and home watch way, discussions the in few one in I that. had no

fanned will think don’t is negative of angst but by drumbeat have our the the operations. impact a it kind on we the of think I coverage,

there’s benefit the and the because it more home if it all In becomes – quarantine our in fact, widespread primary potentially and then States, in it be more I think. of we’d that, entertainment, business could could source United of

Craig Huber

X% stuff. Then I subs from other Perry, think to mentioned your you platforms X% come of OTT and

top the four of numbers Just in if how if households for you’d over the four, of air. TV average you little comes an out stations, How sort versus versus that the it down typical given market that’s break a your those the sort whole don’t a just versus of across mind part percentage that in in the that break market any guys? MVPD, bit get the watch upon your it four does OTT, footprint, a traditional you percent through that could expand the market think big your or about

Tom Carter

I don’t think there is an average market.

Perry Sook

about I dozen – virtually years XX% so. a last status think that that’s over-the-air that’s for Yes, paid, the XX% we’re or and quo half

pay close that but stations Tom or it that. all the the Within when X% call XX% to let’s the on just X%, X% in Tribune ecosystem, to the today, you looking depending say, I activated side think you’re something house get TV of heard which at

that going variations about snapshot have on MVPD virtual and for you, gives I’m some traditional sure you exactly But markets, as So and it can XX% XXX not get it’s pricing is. you’re across what theme. as to of I MVPD. That’s X% the dicing it because

Tom Carter

of there given a somewhere television And that’s and XX% there’s XX% during a statistic is think reached broadcast out the between population by week. I

question your many So is watch it’s television? how single-digit think I any don’t percentages.

Craig Huber

really And anything positive average? doing side, bit ones helpful. insurance, outliers but that’s to the seeing significantly You you flip cetera, want the about what just you a talked are a than on I that’s on also mean, categories? you’re et services, don’t maybe from the very side, Can about now? Okay, talk about that the worse talk auto, little

Perry Sook

probably and category service would were quarter home areas. was The in the banking repair, look insurance internally say, lottery attorneys packaged was both some I of digits. as next digits. expectations. product utilities HVAC, one substantially positive again, of grocery retail percentage the goods, all our basically here, of surprise. financial But was into Telecom, pleasant well in That as appliances, you double digits double and And on get fourth up then if entertainment, home Yes. basis. you spending, growth category kind were up double below a and travel, was group a categories, literally stores electronics our highest the and drug stores, pharmaceuticals in our

economy. economy and So again, the And feel we we’ve scorecard is about XX best the while. of underlying pretty of probably out the underlying the turned XX in in, a good strength

Craig Huber

think over to five sort here you maybe years. also, category, you. you think as sort more ask, it be the sports Then you just can of would significant you as next how How think betting? completes Perry quantify about sort wanted that new three Thank add core a And will think to could I think would Tom, do decade – percentage? for time it states your and of did more how allow advertising evolving you out of the you this much sport by advertising, that betting maybe or a about how

Perry Sook

Yes, you’re state-by-state a it’s our basis. view, I on think, correct, is

don’t where millions. And category states all the sports the of tens kind hundreds one in of now revenue market is Philadelphia, surrounding dollars, as participate our so Jersey, have in thousands not it Pennsylvania, New and the we and betting or that instance huge Delaware, organically, the and contributor. right The it grow in of is will see a we

the anything, that think will if it increase engagement I broadcast. So in actual

and basketball retention. bet or skin football be a will prop golf will whether it there levels telecast engagement a viewer If it’s which game, a probably I you’ve the viewing got – or in game, more think might think help or I bet,

But we’re fairly game-changing a category. sanguine on it being

any but at thing, will. I will points not time, it if we’re you enough the to it give as projections. have grow looking big over we real think being next data But won’t

Craig Huber

you guys. thank Great,

Perry Sook

bet. You

Operator

next comes John from question Our JK Media. Kornreich,

John Kornreich

have thanks. I of questions, couple a

what can channel, idea of give the latest was food annualized us an you? dividend you On to the subject

Tom Carter

for It was XXXX…

John Kornreich

Yes.

Tom Carter

it’s south distribution, not Just distribution dividend, – $XXX was cash of the a million. just south

John Kornreich

that it is should at somewhat least this your And up expectation be Okay. year?

Tom Carter

We I growth large some. off of expecting haven’t given specific guidance, but of think amounts don’t that, we’re but

John Kornreich

is know, and all what’s we observers, X%? your market flow in renowned free you’re here the per down share Tom, increase stock Okay. reaction a cash to XX%

Tom Carter

think don’t I related they’re at all.

obviously, et of is I clearly, phenomenon cetera. stock. phenomenon think stock trying than Nexstar only relates And investors, the portfolios, rearranging fundamental clearly, as with do a this to control. We it only what a risk to has down price X% market off can on some their trades, more to the liquidity, we can control

John Kornreich

in Could bigger you you said reclarify political the first it due hear downdraft originally had than primarily to in growth say you Did you being core I the quarter? was slight what expected? about

Perry Sook

ahead core have it was is quarter. on the the only growth of we’re quarter, my months Yes. where into I in and mean, to last two first net year. revenue going I’m

would over come the where So to core prior we’re yet out, leave impression out. we not come just growth, the be projecting it I will have don’t to I can’t know want I that and quantify year. going growth to where we’re

Tom Carter

take of first year. in the to of growth expectations from the in Our holiday core because the for the and to year half then back half a political grow of are spending

John Kornreich

Okay.

food keeper for Is this you? time back for long-term being a the Going to channel.

Tom Carter

of tax basis, a the the Tribune an approached obviously, And distributions And and to to work of asset, us that such, it an was a of on station accretive or basis WGNA fact comes our that and is outright build, favor over at again, Unless our Network of that someone to Food shareholders. the value the us. versus be accretive sale are. And as to the came sales be a as in point, with low asset the are does markets said assets, bankruptcy. given a not And equation valuable in offer us an over in issue, the where from whether lot from an very and cash of an perspective sale or part the mind, it we’ve because are after-tax with has the this flows. keep basis tax the

John Kornreich

distributions are But fully taxable the also?

Tom Carter

is of all all EBITDA stations. from as Sure, our of our

John Kornreich

Yes.

Okay guys thanks.

Operator

like this back in to I’d turn over time. no call presenters. the queue There to further the questions today’s are at

Perry Sook

to joining by you the today. buying today. into that of guess that on progress. Thank news first the a stock with And market us saying, all Travis. we X% here I a your thank the put the for But sounds great the call today, down opportunity. I’d end like with months we. you joining thank you will measure forward all in couple And take so our on and to call report time are of We quarter and you for results look your you,

Operator

this Thank concludes you. today’s Ladies and teleconference. gentlemen,

may You now disconnect.

Nexstar Media (NXST) 26 Feb 202019 Q4 Earnings call transcript