Rosy Nexstar Earnings to Pay Down Debt

Nexstar Broadcasting Group lifted by political advertising.
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Nexstar Broadcasting Group reported improved earnings for the second quarter, lifted by political advertising and bucking a trend of weak results by most other TV-station operations for the three months ended June 30. The solid earnings will help it to reduce corporate debt.

The Irving, Texas-based company posted net income of $3.9 million, or 14 cents per basic diluted share, versus a net loss of $1.3 million (5 cents) in the same quarter a year earlier. Free cash flow spurted 15.6% to $11.1 million.

Net revenue advanced 2.9% to $70.7 million. Small categories helping the overall revenue gain were retransmission-consent payments received that advanced 14% to $4.8 million and electronic-media sales that rose nearly threefold to $2.6 million. These offset the softness in spot revenue and slippage in network comp payments.

Nexstar said that for the full year, the retrans and emedia “digital high-margin revenue streams” are expected to account for $30 million in revenue.

“Throughout 2008, we’ll apply the company’s free cash to complete our digital-television cap-ex program and to reduce debt,” Nexstar chairman and CEO Perry Sook said in a statement. “We view our projected 2008 digital-television cap-ex spending of approximately $30 million as one-time in nature, so 2009 free cash flow will benefit materially from the conclusion of the program.”

As a result of debt paydown, Nexstar expects its debt ratio to end 2008 at 5.5, which would be the lowest in company history and under a 6.5 ratio allowed in debt-covenant agreements. Debt stood at $655.6 million as of June 30, down from $665 million at the end of December.

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