Company Reports

Nexstar’s fourth-quarter results and 2024 guidance were consistent with our expectations. Strong distribution growth in the quarter offset a continued year-over-year decline in core advertising. While the adjusted EBITDA margin fell in 2023, we expect a bounce back with political revenue in 2024. Despite this, we are lowering our fair value estimate to $170 from $205 to reflect a steeper contraction in advertising and distribution growth than we previously assumed amid uncertainty about the future of linear TV.

We expect that industry headwinds faced by linear television (the traditional form of TV that is watched at scheduled times) and the continued transition of advertising to digital mediums will result in ongoing challenges for Nexstar that lead its business to decline.

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.

Nexstar is the largest television station owner/operator in the United States, with stations in 116 markets. Of its 200 stations, 155 are affiliated with the four national broadcasters: CBS, Fox, NBC, and ABC. The firm has networks in 12 of the Top 20 television markets and reaches over 68% of U.S. TV households. Nexstar also owns NewsNation (formerly WGN) and 75% of The CW.

Nexstar reported a solid second quarter as revenue met and adjusted EBITDA slightly exceeded the top end of management’s guidance. Despite the solid results, shares traded down 4% as we think investors were spooked by management's commentary about continuing to invest in sports rights for The CW. While we remain skeptical about the long-term opportunity at the network, we don’t expect Nexstar to go crazy by trying to outbid its much larger competitors. We think Nexstar will try to pick off lower-priced or unloved rights similar to the deal to carry Nascar’s second-tier Xfinity series. However, we think that these deals are unlikely to move the needle significantly even if The CW can break even on them. We are maintaining our $205 fair value estimate.

Nexstar is the largest television station owner/operator in the United States, with stations in 116 markets. Of its 199 full-power stations, 155 are affiliated with the four national broadcasters: CBS, Fox, NBC, and ABC. The firm has networks in 12 of the Top 20 television markets and reaches over 68% of U.S. TV households. Nexstar also owns NewsNation (formerly WGN) and 75% of The CW.

Nexstar posted a mixed start to 2023 as continued erosion in advertising spending weighed on the top line. The expected decline in political advertising revenue was compounded by an 8.5% decrease in core advertising. Despite continuing headwinds for core advertising, we expect distribution revenue growth from renewals along with earlier-than-usual political advertising spending to help stabilize the overall outlook for 2023. We are maintaining our $205 fair value estimate.

Nexstar posted an in line end to 2022 as fourth-quarter revenue and adjusted EBITDA met FactSet consensus projections. As projected, fourth-quarter political ad revenue jumped to $265 million from $19 million a year ago, as full-year revenue of $506 million set a record for a midterm election year and came within 1% of the 2020 presidential year. However, core advertising continued to struggle, down 9% when excluding the impact of the CW, which was acquired in October. We expect core advertising to remain challenged in 2023 due to lower ad budgets and continued cord-cutting. We are maintaining our $205 fair value estimate.

Nexstar posted an in-line third quarter with revenue and adjusted EBITDA that met FactSet consensus projections. As expected, political ad revenue skyrocketed to $240 million from $26 million a year ago. Management announced that 2022 political ad revenue hit $500 million as of Nov. 8, a record for a midterm election year and well ahead of the pro forma $383 million generated in 2018. Due to continued growth in political ad spending and increased politicization across the U.S., we now expect Nexstar to set political ad revenue records in 2024 and 2026. As a result, we are raising our fair value estimate to $205 from $195.

Nexstar is the largest television station owner/operator in the United States, with 199 stations in 116 markets. Of its 199 full-power stations, 155 are affiliated with the four national broadcasters: CBS (49), Fox (42), NBC (35), and ABC (29). The firm has networks in 12 of the Top 20 television markets and reaches over 68% of U.S. TV households.

Nexstar announced that it finalized an agreement to acquire 75% of The CW Network from Paramount and Warner Bros. Discovery, which will each continue to hold 12.5% of the “mini” national broadcaster. Nexstar will not pay any consideration for its stake but will take on its allocation of the network’s future losses that are rumored to run around $100 million annually. The deal is expected to close in the third quarter with no regulatory approval required, and Nexstar will take over operational control immediately. Since no financial data was provided, we are holding off on updating our model and maintaining our $195 fair value estimate.

Nexstar reported another strong quarter as second-quarter revenue met and adjusted EBITDA beat FactSet consensus projections. Political ad revenue jumped in the quarter to $87 million up from $9 million. Given the growth at Nexstar and Sinclair along with several competitive races and high fundraising levels, we expect record political spending for a midterm election year. Distribution revenue improved 5% as the firm benefited from higher renewals in 2021. We are raising our fair value estimate to $195 from $175 to account for higher political ad and distribution revenue growth along with some slight margin improvement.

Nexstar is the largest television station owner/operator in the United States, with 199 stations in 116 markets. Of its 199 full-power stations, 155 are affiliated with the four national broadcasters: CBS (49), Fox (42), NBC (35), and ABC (29). The firm has networks in 12 of the top 20 television markets and reaches over 68% of U.S. TV households.

Nexstar reported a strong first quarter, as revenue and adjusted EBITDA beat FactSet consensus projections. Core advertising was up 4% year over year, led by services and goods, which more than offset the ongoing weak automotive ad spending. Distribution revenue improved 7.5% as the firm benefited from higher renewals in 2021. Management expects these renewals to continue to generate mid- to high-single-digit growth in 2022 and growth acceleration in 2023. We are maintaining our no-moat rating and $175 fair value estimate.

Nexstar is the largest television station owner/operator in the United States, with 199 stations in 116 markets. Of its 199 full-power stations, 155 are affiliated with the four national broadcasters: CBS (49), Fox (42), NBC (35), and ABC (29). The firm has networks in 12 of the top 20 television markets and reaches over 68% of U.S. TV households.

Nexstar reported a better than expected fourth quarter as revenue met and adjusted EBITDA beat FactSet consensus projections. Core advertising was up 4% year over year in the fourth quarter, as ad spending continues to recover despite automotive remaining weak. Distribution revenue improved by 17% as the firm benefited from higher rate increases from renewals in 2020. Management expects that renewals in 2021 and 2022 will lead to mid- to high-single-digit growth in 2022 with higher growth in 2023. We are maintaining our no-moat rating and $165 fair value estimate.

Nexstar is the largest television station owner/operator in the United States, with 197 stations in 115 markets. Of its 197 full-power stations, 158 are affiliated with the four national broadcasters: CBS (50), Fox (43), NBC (35), and ABC (30). The firm has networks in 15 of the top 20 television markets and reaches 63% of U.S. TV households.

Nexstar posted an in-line third quarter, as revenue and operating income met FactSet consensus forecasts. Core advertising was up 13%, as ad spending continues to recover from the pandemic. The firm’s online efforts expanded 47%, as local advertisers returned to the market. We are maintaining our no-moat rating and raising our fair value estimate to $165 from $150 because of stronger-than-projected digital revenue growth and higher expectations for political ad spending in 2022 and 2024.

Nexstar is the largest television station owner/operator in the United States, with 197 stations in 115 markets. Of its 197 full-power stations, 158 are affiliated with the four national broadcasters: CBS (50), Fox (43), NBC (35), and ABC (30). The firm has networks in 15 of the top 20 television markets and reaches 63% of U.S. TV households.

Nexstar Media recorded a slightly better-than-anticipated second quarter, as revenue met and adjusted EBITDA came in above FactSet consensus. Same-station core advertising was up 42% as ad spending rebounded from the COVID-19 impact last year. The firm’s online efforts also bounced back as local advertisers returned to the market. We are maintaining our no-moat rating and $146 fair value estimate.