Perry Sook, chairman/president/CEO of Nexstar Broadcasting Group, is hailed as a pioneer who fought cable operators for retransmission consent cash back when nearly all in broadcasting were content to sit on the sidelines.
The result has been a consistent revenue stream for Nexstar—and subsequent broadcasters who followed suit—at a time when broadcast revenue is hard to come by.
Back from a trip to the Olympics, Sook chatted with B&C's Michael Malone about the Olympic halo at his NBC affiliates, his view on the economy and what the next stage of Nexstar's retrans strategy holds.
Nexstar has 13 NBC affiliates. How has viewer and advertiser interest in the Olympics been, compared to how you figured they would be?
Both viewer and advertiser interest has been high. There's not a lot of economic wind at our backs, so we probably won't set any sales records for this particular Olympics. But we'll deliver the number that's in our plan.
When do you figure the broadcasting recession comes to an end?
I would imagine we will begin to come out of this by the second quarter of 2009. I think by then we'll be up against all these low numbers that we're generating, and I would think the combination of economic stimulus, the outcome of the election, the credit crunch easing and the fact that in the modern era, the average recession lasts between 10 and 12 months—that would be about the time we should start to see some positive economic [movement].
What aspects of the business are helping the parts that are not doing well?
We are spending a tremendous amount of time and effort on building our e-media platform. That revenue stream will double this year. Those are primarily advertisers who have never used our stations before.
Our distribution revenue stream [from retrans] continues to grow at a double-digit rate. With the bulk of our contracts coming through a renewal cycle between now and the end of 2009, we expect to see continued growth in that revenue contributor.
What are some of the battles coming up?
We have [agreements with] one satellite company and about two dozen cable companies that expire on or before the end of the year. The rest expire throughout 2009, so we see a real opportunity. When we negotiated our first agreements for cash in 2005, we were the only car on the racetrack, for all intents and purposes. Now there are plenty of other folks out there racing; maybe we could even draft behind some of the bigger players this time around.
How much do you expect to get?
I can't give specifics, but the guidance we've given was we'd generated around $18 million in 2007, and we've guided for double-digit increases in 2008 and 2009.
Do you see a different attitude from distributors toward retrans now?
I think that's right. The conversations I've had to date in 2008 have been much more constructive than destructive. I don't think any multichannel video provider wants his or her competitor to have a virtual monopoly on distributing our product, so my sense is that the content providers and the distributors are working together constructively to reach an outcome that is acceptable to both parties.