Perry Sook always keeps a legal pad nearby. The man who grew Nexstar from a lone-station operation to the nation’s second-largest local broadcaster, who saw retransmission as a significant potential revenue stream when few else did, who orchestrated the audacious $4.6 billion merger with Media General, likes to say that ideas are the new currency. He’s keen on to-do lists, say those who know him, but jotting down priorities is only half of the equation.
“He’s got a legal pad for everything,” says Tom Carter, executive VP and chief financial officer of Nexstar. “And he loves to cross things off his list.”
It was on one of those pads that Sook charted the growth of Nexstar, once a collection of unremarkable small-market stations, to a bona fide behemoth. On the eve of its 20th anniversary, Nexstar is on course to swell to 171 stations, covering 39% of U.S. households, once its blockbuster acquisition of Media General is approved and completed.
Sitting in the conference room of Nexstar headquarters in Irving, Texas, Sook acknowledges the station-ownership cap the company is approaching. Left unsaid is the complex operating environment for local TV—every deal in this M&A wave, whether jotted hypothetically on a pad or brought to shareholders and regulators, faces intensifying scrutiny. There is more competition for viewers’ attention than ever before. And retrans fees, while an article of faith for many, are not guaranteed to last forever, with the networks demanding a bigger take to keep the partnership intact.
Even so, Sook, one of television’s most creative deal-makers, is charging ahead with his strategy. He still plans to sketch out goals and targets for Nexstar, and for himself. There is the spectrum auction, for starters, a once-a-generation event that will dominate conversation at next week’s NAB Show, plus Sook has been bullish on digital acquisitions since before it was fashionable.
“We’re closer to the cap than we are to zero, but I wouldn’t say we’re done,” says the busiest man in broadcasting. “I spend probably a quarter of my time looking at acquisition opportunities, broadcast and digital, and so more of that time will be spent on digital than broadcast, depending on how much cap space we clear in the auction process.”
Sook got his start in broadcasting as a teen, spinning Top 40 and country records on a Punxsutawney, Pa., radio station during high school. He had a big decision to make after graduating from Ohio University. Sook was presented with the opportunity to join his friends in Flagstaff, Ariz., as a TV reporter and anchor, or work at a radio station in Orlando in sales. Sook loved radio; besides his teenage days in Punxsutawney, he called Pittsburgh Pirates games for the college station.
Aspiring to build something, he went with the sales job. “It represented the fastest track to management,” Sook says.
The track was indeed fast. Sook was national sales manager at KTVT Dallas at age 27. He was general sales manager of a different Dallas station a few years later, then interim general manager, then ran a group, Seaway Communications, all by age 32.
“I just had the drive to do so,” he says. “I’ve always had a high need to achieve.”
Sook picked up key lessons along the way, such as working with a resistant board of directors and figuring out a Plan B or C for a deal when Plan A did not come through. When he could not get the Seaway board to see his vision on acquisitions, Sook took $250,000 of his own money to buy the Fox affiliate in Lexington, Ky., and launch Superior Communications. He next acquired WYOU in Scranton, Pa., in 1996, and Nexstar was born.
Nex’ Big Thing
Sook had a clear vision for the fledgling company, with a focus on localism, not the “video jukebox” model, he says, that some syndication-heavy, small-market stations employ. “Building a company serving medium-sized markets and smaller markets in local media with a substantial commitment to local news, and growing the local news was where we saw our niche,” Sook says.
The driven young executive was clearly going places. Blake Russell, Nexstar senior VP of station operations, first met Sook back when Nexstar bought his Beaumont, Texas station in the mid-’90s. “I remember thinking along the way, ‘If I could get to a point where I could just slip in his hip pocket and just go where he goes…’” Russell recalls.
Russell jumped on the Nexstar train in 2000. Much of Sook’s executive team came on board around then, including co-COOs Timothy Busch and Brian Jones and Richard Stolpe, VP/director of engineering.
Sook started to make his mark on the local broadcast industry, including the now legendary retrans fight in late 2004, when he demanded cash for carriage from pay-TV operators in four markets. The stations went dark for subscribers, but Sook stuck to his guns. After a months-long stalemate and many millions in lost revenue, the notepad showed Nexstar had prevailed.
“What gives us the moxie is the courage of our convictions,” Sook says. “And so we had to have a thick skin and say, ‘we’re right on this, we’ve got to stay the course and go the distance.’”
Today, retrans represents an absolutely essential chunk of all local broadcasters’ revenue. Last year, SNL Kagan forecasted U.S. TV station owners’ retrans fees to reach $10.3 billion by 2021, following $6.3 billion in 2015. (Of course, networks get their piece of that too.)
Retrans was by no means the only Sook disruption. Nexstar dropped Nielsen ratings, citing their cost and questionable accuracy, years before other groups began to do so. It was one of the first station groups to initiate joint sales agreements, which enable a single operator to steer the business strategies of multiple stations in a single DMA, saving money. Nexstar has also helped foster minority ownership through shared services and local marketing agreements with Marshall Broadcasting and Mission Broadcasting.
“If Perry thinks something is the right thing to do, not only for his group but the industry, he pushes whatever that agenda is forward,” Steve Lanzano, TVB president/CEO.
Before mass consolidation gripped local television, Sook penciled out his vision for the industry. Besides the network-owned groups, he believed, perhaps a half-dozen other station “super-groups” would have the scale to hold up amid the economic challenges presented by the networks and video distributors. He was determined that Nexstar be one of them.
After a series of medium-sized acquisitions in recent years, including deals for the Grant group, a bunch of Newport Television stations and Landmark-owned KLAS Las Vegas, Sook eyed a far bigger prize. He knows exactly how long it took from the announcement of Nexstar’s unsolicited public offer for Media General in late September last year to the signing of the deal in January: 122 days. He doesn’t recall how many of those days found him wide awake at 3 in the morning, staring at the ceiling. But it was a lot of them.
Sook had been interested in Media General for years, going back to the days of LIN Media, given their complementary geography, businesses and culture. After Media General acquired LIN, Sook had dinner at a Manhattan seafood restaurant with the combined company’s majority shareholder, Soohyung Kim, and told him Nexstar was the last piece of the Media General puzzle.
“There wasn’t much reaction back,” concedes Sook, as Kim and Media General preferred to partner with Meredith instead. In September, it was announced that Media General would acquire Meredith in a deal valued at $2.4 billion, setting up Meredith Media General to be the third-largest owner of stations in the nation.
A few weeks later, Nexstar made an unsolicited offer for Media General, a Hail Mary that nonetheless perked up the ears of its shareholders. Media General rejected the offer, but the negotiation had begun. Meredith, once the favorite, soon fell under investor scrutiny for its laggard print assets, and Sook’s approach looked better and better.
“[Media General] had already decided to go another route, and Perry changed their mind,” says Julie Pruett, Nexstar senior VP and regional manager. “He knows where he wants to go, and leads us all to do that.”
In January, Media General announced that it would be acquired by Nexstar in a deal that valued the company at $4.6 billion and left Meredith standing at the altar. Some 9,000 people will work for the new Nexstar Media Group.
“Perry is not big on the word ‘no’—he’s always looking for the word ‘how,’” says Gordon Smith, president and CEO of the NAB. “He finds a way around roadblocks.”
While Sook is a key industry leader, serving on the board of the NAB, TVB and NBC affiliates, among other vital industry posts, he was viewed with suspicion by some peers for disrupting an amicable pact between two respected broadcast companies. For Sook, it was strictly business—he saw an opportunity to improve Nexstar shareholders’ lot and better position the company for the future.
The company’s perch “was never a destination,” says Sook, who was inducted into the B&C Hall of Fame in 2014. “This is the byproduct of doing good business every day and making good acquisitions, and we just woke up one day and said, ‘Holy cow, we’re going to be the second-largest company in television.’”
Time to Get to Work
Earlier in his career, when Sook was running an Oklahoma station that moved from fifth place in its market to fourth, he printed up T-shirts for staffers and threw a pizza party. There was no such celebration after the Media General deal was signed. “Now the real work begins,” Sook told his staff.
Nexstar needs to obtain regulatory approval, which is expected to occur late in the third quarter or early in the fourth, then integrate the Media General stations into the company. Sook mentions an integration “SWAT” team that will dedicate seven or eight months to getting all the stations on the same page. His executive team is excited to take on the massive new group. “Perry does a good job communicating a vision and demonstrating his excitement and commitment to the vision,” says Carter. “I think that resonates with people.”
Through it all, Sook, who will mark 34 years of marriage with his wife, Sandy, in June, remains much more than a bloodless CEO. His well-organized office is adorned with photos of his family, perched next to those legal pads. Last fall, Sook—who frequently describes the broadcast industry in baseball metaphors—moved up his executive team’s flight to Toronto for investor meetings so they could catch their beloved Texas Rangers against the Blue Jays in the playoffs. “He doesn’t think he’s that far removed from the time when he was the lone corporate employee,” says Carter.
Sook’s favorite days on the job are when he visits a station—be it KARK Little Rock or WATN Memphis or WYOU in Scranton, the one that started it all—and holds an all-staff town hall. “It really is refreshing when you look at the numbers I look at every day and then you get to meet the people that are behind those numbers,” Sook says. “That kind of brings it all home as to why we do what we do.”
It hasn’t all been smooth sailing for Sook and Co. In 2011, Fox cut ties with Nexstar stations in Evansville and Fort Wayne, Ind., and Springfield, Mo., when Sook would not agree to aggressive new affiliation terms, whacking a giant chunk of value off the local outlets. That same year, Nexstar put itself on the block. The group was valued at around a billion dollars; there were a number of diligence requests and site visits from tire-kickers, but Sook did not hear an offer that justified a sale, and he quietly took Nexstar off the block over a year later.
But Sook stayed the course. A decade ago, Nexstar cracked B&C’s rankings of the top 25 station groups, holding down the final spot with slightly more than 7% of U.S. coverage. Five years ago, the company was No. 16, at 11.5%. A Nexstar station was not typically a primary competitor in news and ratings, but when you assemble a 171-station group, you end up with some winners.
Elizabeth Ryder, Nexstar senior VP and general counsel, calls Sook “the right man at the right time for this industry.…I don’t know that Perry started out as the biggest, baddest, best, [most] kickass CEO in the broadcast industry, but I think at some point he realized he could be.”
Colleagues ask the hard-charging broadcaster if he ever takes a moment to smell the roses and appreciate what he has accomplished. The answer is, not all that much. “I use the saying here that we are often pleased but rarely satisfied,” Sook says. “There’s always the next challenge and next opportunity. We should always be striving.”
—Additional reporting by Michael Malone.