Nexstar Bucks Industry Trend, Tops Political Guidance

The group, still awaiting approval of its Media General merger, isn't feeling the pain of unexpectedly low campaign spending
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While the unexpected dearth of political advertising has taken its toll on station groups across the industry, Nexstar Broadcasting CEO Perry Sook said Tuesday that on the heels of a record third quarter, campaign spending this year has already surpassed forecasts.  

Political money accounted for $25.5 million of the group’s record $275.7 3Q revenue—a 23.6% increase over the same period of time in 2015. Retransmission revenue rose 22.8% to $98.2 million. Digital revenue was up 42.2% to $28.6 million, according to the group’s earnings reports.

“We are optimistic as we look toward the completion of 2016 based on the fact that in the fourth quarter to date we’ve exceeded our guidance of $100 million in full year political revenue while simultaneously driving low single digit core revenue growth and continued double digit growth from our retransmission and digital revenue streams,” Sook said.

“These factors drove record third quarter net revenue, which led to record third quarter operating income, BCF, adjusted EBITDA and free cash flow, and we brought about 21% of every net revenue dollar to the free cash flow line. Reflecting the benefits of scale and the strong operating leverage in our business model, Nexstar’s 23.6% rise in third quarter net revenue resulted in 30.4% growth in third quarter BCF, a 34.2% increase in adjusted EBITDA and a 26.6% rise in free cash flow,” he said.

“As a result, we remain confident in our guidance for Nexstar to generate record free cash flow in 2016, and on a stand-alone basis, the company is well on pace to achieve our guidance for annual average 2016/2017 free cash flow of $250 million—or average pro-forma free cash flow of $8.15 per share per year."

Tuesday’s report comes as Sook awaits the FCC’s approval of his company’s acquisition of Media General, which was expected to be wrapped up by the end of the year. Nexstar, whose new name will be Nexstar Media, would become the second largest TV group in the country. The merger has been stalled because the FCC said it wouldn’t act on it until the incentive auction is over. Sook, however, said he expects Nexstar to be granted an exception and that the deal will close in the fourth quarter.

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