Nexstar Earnings: Difficult Retransmission Negotiation Demonstrates Need for Attractive Content

There were fewer things to like in no-moat Nexstar Media’s third-quarter results, as revenue fell 10.8% in the absence of political advertising, and adjusted EBITDA margin shrank to 20.8%, nearly half that of the prior-year quarter. The core business showed some expected softness as revenue excluding political ads fell 2.4% from a year ago and 10% from the second quarter because of the firm’s negotiations with DirecTV. Despite the declines, we believe that the issues tainting the quarter are temporary and that Nexstar will benefit from projected record 2024 political advertising and an improved economy. We maintain our $205 fair value estimate.