Chicago Radio: Nexstar 3Q Revenue Surges 68.5%

WGN 720 AM's parent Company Nexstar Media Group, Inc. today reported financial results for the third quarter ended September 30, 2020. 

The actual results reflect the Company’s legacy broadcasting and digital operations and quarterly results from the Tribune Media stations which were acquired on September 19, 2019. Third quarter 2020 revenue from WGN America, also acquired in the Tribune transaction, is included in core advertising revenue and distribution fee revenue. 

Highlights:

• Core ad revenue totaled $382 million, up 31.6% from $290.2 million in 3Q 2019.
• Political ad revenue was $21.6 million, up 583% from a year ago.
• Second quarter net income totaled $132.4 million, an increase of 1,115% from 3Q 2019.
• Distribution fee revenue grew 83% to $538 million.
• Digital revenue dropped 5% to $55 million.
• Other revenue rose 8% to $10 million.
• Net revenue increased 68.5%, from $664 million to $1.1 billion.
• Broadcast cash flow was $463 million, up 128% from $203 million.

Perry A. Sook, Chairman and Chief Executive Officer of Nexstar Media Group commented, “During the third quarter we continued to successfully navigate the challenges presented by the pandemic thanks to our outstanding operating teams and their ability to adapt and dynamically manage the business for continued growth. Nexstar delivered record third quarter operating results with net revenue, profitability, and cash flow metrics all exceeding consensus expectations. 

"Third quarter net revenue increased 68.5% and with the strong operating leverage in our business model, Nexstar generated record third quarter BCF, adjusted EBITDA and free cash flow with these metrics growing 128.3%, 209.1% and 268.3%, respectively on a year over year basis.  In addition, throughout the quarter, we made significant progress with our leverage reduction and return of capital initiatives as we lowered net debt by $162.5 million and allocated $150.4 million toward share repurchases and quarterly cash dividends.

Perry Snook

“Reflecting our continued focus on optimizing our capital structure and lowering our cost of capital, during the quarter we completed two capital market transactions that allowed us to eliminate our most expensive debt while extending maturities. The resulting interest expense savings, combined with the declining borrowings and attractive rate environment, will allow us to de-lever even more quickly and increase reported free cash flow, while affording us the financial flexibility to act on other opportunities to enhance shareholder value.  We generated approximately $854 million of free cash flow in the first nine months of the year (before one-time transaction expenses) and with expectations for a robust fourth quarter, Nexstar will finish 2020 with net leverage below 4x.  Reflecting the repurchase of 2,250,000 shares in 2020 to-date, we have reduced our issued and outstanding share count to approximately 44.0 million and with the recent expansion of our repurchase authorization, we remain on plan to continue to return capital to shareholders while aggressively reducing leverage.

“Nexstar’s industry leading scale, including last year’s addition of the Tribune stations, diversified revenue sources and consistent, solid execution resulted in a 68.5% rise in third quarter net revenue. Third quarter total television advertising revenue rose 70.8% as we benefited from the recovery in advertising spending for key categories, drove year-over-year increases in same station new-to-television business and captured exceptionally strong shares of political spending in our markets. Distribution fee revenue rose 82.6% year over year to $538.4 million reflecting a full quarter benefit of the retransmission consent synergies from last year’s Tribune Media transaction, our renewal in 2019 of retransmission consent agreements representing approximately 70% of our subscriber base and MVPD and OTT subscriber counts consistent with our expectations. With approximately 18% of our subscriber base remaining to be renewed and repriced this year, and subscriber levels remaining consistent with our expectations, further revenue growth from this source is projected for the balance of 2020 and beyond.

“In summary, Nexstar’s leading local platform has performed exceptionally well despite the challenges presented by the pandemic. Our differentiated broadcast and digital content,  innovative sales programs, continued robust distribution revenue growth, significant income from equity investments and record levels of 2020 political spending continue to drive financial results."