Nexstar is back in the hunt for management services agreements, said Perry Sook, president and CEO, on the broadcaster's earnings call Nov. 8. Such agreements, with a Nexstar station supplying management to a would-be rival in the market, is a cornerstone of Nexstar's "virtual duopoly" strategy.
Sook said Nexstar made such a proposal this week. "There are opportunities out there," Sook said. "We do have a proposal in the works, and we'll see where it goes."
In 2009, Nexstar announced such an arrangement with Four Points Media, which saw Nexstar get around $2 million a year, plus incentives. Sinclair agreed to acquire those stations in September. Sook said there would likely be a termination fee due to Nexstar from Four Points in the first quarter of 2012.
Nexstar reported management fee revenue of $968,000 in the third quarter, up 21%. Sook said the company had not focused on management services deals as much in the past, as it had been spending more time on its plan to explore strategic alternatives, including a possible sale, that it announced in July.
Regarding those strategic alternatives, Sook said the process is in the "middle innings," with a number of parties issuing diligence requests and seeking site visits. "We are actively engaged," he said.
One wild card in a possible sale is Nexstar's relationship with Fox; Nexstar and Fox parted ways in multiple markets over terms of affiliation. Sook said eight Fox affiliates in the Nexstar group have expired agreements, but sounded optimistic a deal would get done.
"We continue to work on finalizing agreements with them," he said.
Nexstar was the rare station group to grow revenue in the third quarter, posting a 2.3% increase against tough political advertising figures in last year's third quarter. Sook credited the group's mid-size markets as being better insulated against boom and bust cycles, and a big turnout from local auto dealers.