Nexstar's Sook Sees Major Broadcast Consolidation Continuing

Perhaps a dozen substantial station groups nationwide in future

By Michael Malone -- Broadcasting & Cable, 11/6/2012 11:33:01 AM

Buoyed by strong third-quarter earnings and yet another multistation acquisition, Perry Sook, president and CEO of Nexstar, painted a compelling picture of the local TV universe a few years out, with 10-12 truly substantial station groups left, and Nexstar very definitely one of them.

"It's very inefficient for groups outside of the top 10 operators," he told investors on Nexstar's earnings call. "I think the industry will be made up of 10-12 major companies -- the four national content providers [network O&O groups], and 6-8 distribution partners that are substantial in size, with around 20% of U.S. coverage."

Sook envisions Nexstar as one of the last groups standing -- pulling in around a billion in revenue. He noted that Nexstar is about 70% there; its recent acquisitions will give Nexstar around 12.3% U.S. coverage. Nexstar acquired 12 stations from Newport TV in July, which closes Dec. 1, and worked out a pair of acquisitions Nov. 5 for five more stations.

One of the deals from this week had a different buyer lined up, until a credit issue cratered the agreement.

"We've said it before -- we may not be the highest price, but we can get to the finish line," said Sook. "That came into play in this acquisition."

One of the more active buyers in the business, Nexstar also sold KBTV Beaumont to Sinclair, which Sook called "a win for both parties."

Nexstar will continue to examine new properties, with a couple black books on Sook's desk. "Our criteria is, an accretive acquisition in markets we can inherit a new duopoly, or ones with a fairly clear path to create one," said Sook, who noted the company would be "very disciplined" in what it would pay.

Nexstar reported a 20% gain in quarterly earnings Nov. 6, paced by political spending and national ad revenue, though the latter's 18.4% gain over the previous third quarter was largely a function of a key auto dealer switching from the local to national category.

As Nexstar grows, Sook said it is unlikely the group will sell broadcast spectrum to the government. "We'll have an open mind and look at the value proposition," he said. "But I think it would be a stretch for us to participate. I think anyone making money in commercial television would be hard pressed to sell their spectrum."