Nexstar CEO: Advertisers 'Coming Out of The Woodwork'

After reporting core advertising up 42% from the pandemic-suppressed levels of the second quarter of 2020, Nexstar Media Group Chairman-CEO Perry Sook sees the strong recovery continuing in the current quarter. In his conference call with Wall Street analysts Wednesday morning, Sook quoted one of Nexstar’s national reps (whom he didn’t identify) as saying: “We see advertisers coming out of the woodwork.”

“Looking ahead, we’re encouraged by the overall acceleration in economic activity and the improved trajectory of ad spending across our footprint as market conditions continue to improve,” Sook told the analysts.

Perry Snook

“In the second quarter, total revenue in Nexstar’s top 10 ad categories was 53% ahead of the prior year and 44% ahead of our 2021 first quarter. We recorded gains in all of our top 10 categories, with the biggest dollar gains in our top two — auto and attorneys. From an overall growth standpoint, the lottery and sports betting category had the biggest percentage increase, growing by 282% over last year. And this category remains super-hot across all of our platforms,” he said.

Asked later by an analyst just how big the sports betting category is going to be, Sook said the rapid growth will continue as more and more states legalize online sports betting. It quickly became a top-10 category, Sook said, and he expects to see it move into the top 5.

“With regard to auto going forward, yes we do project auto recovering in 2022,” President-COO/CFO Tom Carter told the analysts “I’m not going to give specifics with regard to what percentage recovery, etcetera, but we will see that. I would say that the unintended benefit of all of this is auto was a mid-20s percentage contributor to total advertising revenue historically. Right now, I want to say it’s in the mid-to-high-teens. We don’t see it going back to the mid-20s going forward, because a number of categories — gaming and sports betting in particular — have risen during this past 18 to 24 months, and those aren’t going away.

“As well as other categories, services in particular, that we see continuing to be strong, so auto recovery is part of the projection. I wouldn’t say it is the driving factor,” Carter said. He noted that political will be very robust, while Sook said that Nexstar is not projecting that 2022 political will exceed the 2020 presidential election year — but the projection is getting closer.

Sook continues to be gung-ho on the NewsNation national cable operation, which is gradually expanding to more and more dayparts and has been profitable from its launch. “We’re getting the same cost-per-point in the scatter market as CNN. And I thought that would take years to achieve. Now, we’re obviously getting smaller rates, because our ratings are smaller, but we’re considered a peer group in the news space,” he said. Noting that viewer awareness of the brand is still the biggest barrier, Sook said a major ad campaign will soon launch.

“We are just beginning to build a national sales presence, and that will come more into focus over the next year-and-a-half, two years,” Sook said of the impact of the scale Nexstar now has to offer advertisers.