Q2 2024 Nexstar Media Group Inc Earnings Call

August 8, 2024

Operator: Good day, and welcome to Nexstar Media Group's second quarter 2024 conference. I will now turn the conference over to Joe Jaffoni, Investor Relations. Please go ahead, sir.

Operator: Good day and welcome to Nexstar Media Group's second quarter 2024 conference. Today's call is being recorded. I will now turn the conference over to Joe Jaffoni, Investor Relations. Please go ahead.

Good day and welcome to Nexstar Media group's second quarter 2024 conference call today's call is being recorded.

Now I'll turn the conference over to Joe Giussani Investor Relations. Please go ahead Sir.

Joseph Jaffoni: Thank you, Paul, and good morning, everyone. I'll first review the Safe Harbor language, and then we'll get right into the call. All statements and comments made by management during today's conference call, other than statements of historical fact, may be deemed forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Nexstar cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those reflected by the forward-looking statements made during today's call.

Joseph Jaffoni: Thank you, Paul, and good morning, everyone. Nexstar undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. It's now my pleasure to turn the conference call over to your host, Nexstar founder, chairman, and CEO, Perry Sook. Perry, please go ahead.

Joe Giussani: Thank you Paul and good morning, everyone. I'll first review the Safe Harbor language and then we'll get right into the call all statements and comments made by management during today's conference call. Other than statements of historical fact may be deemed forward looking statements for purposes of the private Securities Litigation Reform Act up 1995, Nexstar cautions that these forward looking.

Joe Giussani: <unk> are subject to risks and uncertainties that may cause actual results to differ materially from those reflected by the forward looking statements made during today's call.

Joseph Jaffoni: For additional details on these risks and uncertainties, please see Nexstar's annual report on Form 10-K for the year ending December 31, 2023, as filed with the Securities and Exchange Commission, and Nexstar's subsequent public filings with the SEC. Nexstar undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. It's now my pleasure to turn the conference call over to your host, Nexstar founder, chairman, and CEO, Perry Sook. Perry, please go ahead.

Joe Giussani: For additional details on these risks and uncertainties. Please see <unk> annual report on Form 10-K for the year ended December 2031, 2023 that's filed with the Securities and Exchange Commission and Nexstar subsequent public filings with the SEC.

Joe Giussani: Nexstar undertakes no obligation to update or revise any forward looking statements, whether as a result of new information future events or otherwise.

Joe Giussani: It's now my pleasure to turn the call conference call over to your host Nexstar founder Chairman and CEO Perry Sook Perry. Please go ahead.

Perry Sook: Thank you, Joseph. And good morning, everyone.

Perry Sook: Thank you Joseph and good morning, everyone. Thank you for joining us today.

Speaker Change: With me on our call today are Mike Byrd, our President and Chief operating Officer, and Liang Leehar Chief Financial Officer.

Perry Sook: Thank you for joining us today. With me on our call today are Mike Baird, our President and Chief Operating Officer, and Leanne Gliha, our Chief Financial Officer. I will start with a summary of the recent highlights, followed by Mike's operations review, and then Leanne will review our financials. Next, our strong second quarter financial results mark another quarter of record total net revenue and our third consecutive quarter of all-time high quarterly distribution revenue.

Perry Sook: I will start with a summary of the recent highlights followed by makes operations review and then Lee Ann will review our financials.

Our strong second quarter financial results Mark another quarter of record total net revenue in our third consecutive quarter of all time high quarterly distribution revenue.

Perry Sook: We translated this revenue growth into another quarter of solid adjusted EBITDA and adjusted free cash flow growth, reflecting our disciplined operating strategy. So, stop and think about that for a minute. At a time when the pay TV industry continues to experience subscriber attrition and there is intense competition for national advertising dollars, Nexstar generated the highest first and second quarter distribution and total revenue levels in the company's history. Why is that?

Perry Sook: We translated this revenue growth into another quarter of solid adjusted EBITDA and adjusted free cash flow growth, reflecting our disciplined operating strategies.

And think about that for a minute at a time when the pay TV industry continues to experience subscriber attrition and there is intense competition for national advertising dollars Nexstar generated the highest first and second quarter distribution and total revenue levels in the company's history why is that well it comes down to the value of our programming and reach.

Perry Sook: Well, it comes down to the value our programming and reach delivers to our audiences, customers, and programming partners. The power of broadcast television was again validated in a few recent high-profile settings. For example, the NBA bypassed a contract renewal on a cable television network in favor of a deal that included increased distribution on broadcast television, given the tremendous proven value of the broadcast model that that will bring to the league. In fact, a recent statement by the NBA said, quote, throughout these negotiations, our primary objective has been to maximize the reach and accessibility of our games for our fans. end quote.

Perry Sook: <unk> delivered to our audiences customers and programming partners.

Perry Sook: The power of broadcast television was again validated in a few recent high profile settings. For example, the NBA bypass the contract renewal on a cable TV network in favor of a deal that included increased distribution on broadcast television given our tremendous proven value of the broadcast model, but that will bring to the league.

Speaker Change: In fact, a recent statement by the MBA said quote throughout these negotiations our primary objective has been to maximize the reach and accessibility of our games for our fans and quote we know that reach and accessibility is the lifeblood of every sport and there is no platform that can match the reach of broadcast television.

Perry Sook: We know that reach and accessibility is the lifeblood of every sport, and there's no platform that can match the reach of broadcast television. This is a proven path that has sustained the long-term growth of the NFL and one we believe the NBA will prosper from as well. To that point, NFL Commissioner Roger Goodell reiterated his commitment to broadcast television during an interview just last month, saying, quote, "A lot of our media is not about the dollars as much as it is about how we reach more fans. That's the primary objective for us."

Perry Sook: Thank you for joining us today. With me on our call today are Mike Baird, our President and Chief Operating Officer, and Leanne Gliha, our Chief Financial Officer. This is a proven path that has sustained the long-term growth of the NFL and one we believe the NBA will prosper from as well. As a result, we have delivered outsized long-term returns for our shareholders. Nexstar has owned the network for less than two years, and we're making excellent progress as we continue on our march to turning that business around. The CW operating loss improved by $33 million in the second quarter and by $83 million year-to-date, largely driven by our reductions in programming costs and SCNA.

Speaker Change: This is a proven path to sustained long term growth of the NFL and one we believe the NFL NBA will prosper from as well.

Roger Goodell: To that point NFL Commissioner Roger Goodell reiterated his commitment to broadcast television during an interview just last month, saying quote.

Roger Goodell: Lot of our media is not about the dollars as much as it is about how we reach more fans. That's the primary objective for us.

Perry Sook: He went on to comment that the NFL's presence on broadcast is, quote, what has led to the great, not only popularity of the league, but obviously the great ratings, end quote. The broadcast television business model is anchored by loyal pay television subscribers, including sports and news viewers who subscribe in order to access our content and which account for an increasingly large percentage of the pay TV subscriber universe, and high net worth audiences aged 45 plus who enjoy the superior interface and experience that pay TV provides.

Speaker Change: He went on to comment that the NFL presence on broadcast is quote what has led to the great not only popularity of the leg, but obviously the great ratings and quote.

Speaker Change: The broadcast TV business model is anchored by loyal pay TV subscribers, including sports and news viewers, who subscribed in order to access our content and which account for the increasingly large percentage of the pay TV subscriber universe and the high net worth audiences, aged 45, plus who enjoy the superior interface and experienced that.

Speaker Change: Pay TV provides.

Perry Sook: Moreover, as more media companies lean back into the power of linear, the only segment that generates profit, by the way, we expect the relative value of the pay TV bundle with all of its premium sports and local news content to look more and more attractive, leading to an inflection point in the future for subscriber attrition. Beyond that, we believe the Nexstar story is highly differentiated based on the operating leverage our scale provides, enabling us to generate consistently strong free cash flow and maintain a solid balance sheet.

Roger Goodell: Moreover, as more media companies lean back into the power of linear the only segment that generates profit by the way we expect the relative value of the pay TV bundle with all of its premium sports and local news content to look more and more attractive leading to an inflection point in the future and subscriber attrition.

Roger Goodell: Beyond that we believe the Nexstar story is highly differentiate it based on the operating leverage our scale provides enabling us to generate consistently strong free cash flow and maintain a solid balance sheet.

Perry Sook: As a result, we have delivered outsized long-term returns for our shareholders. In the first half of 2024 alone, we returned 74% of our year-to-date adjusted free cash flow, or $358 million, to shareholders in the form of dividends and share repurchases, reducing our share count by over 3% just this year alone.

Roger Goodell: As a result, we have delivered outsized long term returns for our shareholders.

Roger Goodell: In the first half of 2024 alone we returned 74% of our year to date, adjusted free cash flow or $358 million to shareholders in the form of dividends and share repurchases, reducing our share count by over 3% just this year alone.

Perry Sook: Now I'd like to briefly touch on some of our achievements in the quarter, including the progress we're making on our longer-term growth drivers, including the CW. Nexstar has owned the network for less than two years, and we're making excellent progress as we continue on our march to turning that business around. The CW operating loss improved by $33 million in the second quarter and by $83 million year-to-date, largely driven by our reductions in programming costs and SCNA.

Roger Goodell: Now I'd like to briefly touch on some of our achievements in the quarter, including the progress, we're making on our longer term growth drivers, including the CW.

Roger Goodell: Nextera has only the network for less than two years, and we're making excellent progress as we continue on our March to turning that business around the CW operating loss improved by $33 million in the second quarter and by $83 million year to date, largely driven by a reduction in programming costs and SG&A for the full.

Perry Sook: For the full year, we remain on plan and continue to expect CW's operating loss to improve by over $100 million. Our programming strategies are being validated as the CW delivered its third consecutive quarter of primetime entertainment ratings growth since implementing our new programming lineup. Continuing this positive trend, in May, we added Police 24-7 to the network, which has quickly risen to the number two CW series across all demos. We've also announced our fall primetime schedule for the 24-25 broadcast season, which will include a mix of new and returning original series and family-friendly game shows, including Superman and Lois, Solomon's Crossing, and Inside the NFL, which is moving to Friday nights to preview the upcoming weekend's games and which will now feature the unique insights and analysis of the legendary Bill Belichick.

Roger Goodell: Year, we remain on plan and continue to expect to see <unk> operating loss to improve by over $100 million.

Roger Goodell: Our programming strategies are being validated as the CW delivered its third consecutive quarter of Primetime entertainment ratings growth since implementing our new programming lineup.

Perry Sook: Continuing this positive trend, in May, we added Police 24-7 to the network, which has quickly risen to the number two CW series across all demos. We also announced that Pac-12 Football will be joining our lineup of marquee sports, including Lib Golf, ACC Football and Basketball, the NASCAR Xfinity Series, and WWE Next. The CW will broadcast 11 Pac-12 football games beginning August 31st, with a doubleheader featuring each of Washington State and Oregon State.

Roger Goodell: Continuing this positive trend in May we added police 24, 7% and that work, which has quickly risen to the number two CW series across all demos. We've also announced our fall primetime schedule for the 'twenty four 'twenty five broadcast season, which will include a mix of new and returning original series and family friendly game shows including soup.

Speaker Change: Matt and lowest settlements crossing and inside the NFL, which is moving to a Friday nights to preview the upcoming weekend games, and which will now feature the unique insights and analysis of the legendary Bill Belichick.

Perry Sook: New premieres will include Trivial Pursuit, hosted by LeVar Burton, and Scrabble, hosted by Raven-Symoné, and we renewed the popular series All-American and Wildcard. We also announced that Pac-12 Football will be joining our lineup of marquee sports, including Lib Golf, ACC Football and Basketball, the NASCAR Xfinity Series, and WWE Next. The CW will broadcast 11 Pac-12 football games beginning August 31st, with a doubleheader featuring each of Washington State and Oregon State.

Speaker Change: New premieres will include trivial pursuit hosted by Lavar, Burton and Scrabble hosted by Raymond Simone and we review it renewed the popular series all American and wildcard.

Speaker Change: We also announced that Pac 12 football will be joining our lineup of marquee sports, including live golf ACC football and basketball the NASCAR Xfinity series and WWE next.

Speaker Change: The CW will broadcast 11 Pac 12 football games, beginning August 31, with a double header featuring featuring east each of Washington State and Oregon State. Additionally, the CW will be the exclusive broadcast home to the 2020 for Snoop Dog, Arizona Bowl.

Perry Sook: Additionally, the CW will be the exclusive broadcast home to the 2024 Snoop Dogg Arizona Bowl. Sports remains an important component of our strategy to attract viewers and advertisers, and the Nexstar CW is already clearly different than the one we acquired in 2022. We believe that the best is yet to come. As we've said previously, the station side of our business continues to benefit from our ownership of the network. We announced that three additional Nexstar stations in Chicago, Norfolk, and Lafayette, Louisiana will become CW Network affiliates beginning September 1st.

Speaker Change: <unk> remains an important component of our strategy to attract viewers and advertisers and the Nexstar CW is already clearly different than the one we acquired in 2022, we believe that the best is yet to come.

Perry Sook: As we've said previously, the station side of our business continues to benefit from our ownership of the network. We announced that three additional Nexstar stations in Chicago, Norfolk, and Lafayette, Louisiana will become CW Network affiliates beginning September 1st. These additions benefit us by generating additional operating profit on the station side of our ledger. To date, we have announced the addition of 14 CW affiliates to our station group, bringing the number of company and partner-owned CWs to 49, covering over 45% of all U.S. television households, marking the biggest station footprint of all of the Big 5 networks.

Speaker Change: As we've said previously the station side of our business continues to benefit from our ownership of the network, we announced that three additional nexstar stations in Chicago, Norfolk in Lafayette, Louisiana will become CW network affiliates beginning September the first.

Perry Sook: These additions benefit us by generating additional operating profit on the station side of our ledger. To date, we have announced the addition of 14 CW affiliates to our station group, bringing the number of company and partner-owned CWs to 49, covering over 45% of all U.S. television households, marking the biggest station footprint of all of the Big 5 networks. Turning to News Nation, we successfully expanded to a 24-7 cable news network on June 1st, ahead of schedule, which enabled us to be on the air live during recent historic news events.

Speaker Change: These additions benefit us by generating additional operating profit on the station side of our ledger to date, we have announced the addition of 14 CW affiliates to our station group, bringing the number of company and partner owned Cw's of 49, covering over 45% of all U S television households, marking the biggest station footprint of all of that.

Speaker Change: Big five networks.

Perry Sook: Turning to News Nation, we successfully expanded to a 24-7 cable news network on June 1st, ahead of schedule, which enabled us to be on the air live during recent historic news events. We were live on the air during the attempted assassination of former President Trump and when President Biden announced that he was dropping out of the 2024 presidential race. Importantly, our team's focused effort to build a fact-based, journalism-first news network continues to pay off. According to Nielsen, NewsNation's total viewers in prime Time were up over 200% in Q2 of 2024 versus Q2 of 2021, the comparable period following the network's rebranding and launch in March of that year.

Perry Sook: We were live on the air during the attempted assassination of former President Trump and when President Biden announced that he was dropping out of the 2024 presidential race. Importantly, our team's focused effort to build a fact-based, journalism-first news network continues to pay off. According to Nielsen, NewsNation's total viewers in prime time were up over 200% in Q2 of 2024 versus Q2 of 2021, the comparable period following the network's rebranding and launch in March of that year.

Speaker Change: Turning to news nation, we successfully expanded to a 24 seven cable news network on June. The first ahead of schedule, which enabled us to be on the air live during recent history, making news events, we rely upon the air during the attempted SaaS nation of former President Trump and when President Biden announced that he was dropping out of the 2024 presidential race.

Speaker Change: Importantly, our team's focused efforts to build a fact based journalism first news network continues to pay off according to Nielsen news nation's total viewers in prime time were up over 200% in Q2 of 24 versus Q2 of 2021, the comparable period following the network's rebranding and launch in March of that year.

Perry Sook: And while we are executing well in our business, we continue to take a leadership role supporting the communities where we operate. Each June, on the anniversary of Nexstar's founding, we give employees a half day off with pay to perform voluntary community service or charity work. This June, we again celebrated Founders Day with more than 5,000 of our employees participating. The work benefitted 241 community service organizations or public charities by helping with meal preparation, building houses, school backpacks, hygiene kit assemblies, trash collections, and blood donation, among other activities. In addition, we also raised nearly $150,000 on behalf of these community service organizations.

Speaker Change: And while we are executing well on our business. We continue to take a leadership role of supporting the communities where we operate.

Perry Sook: Each jude on the anniversary of <unk> founding we give employees a half day with pay to perform voluntary community service or charity work. This June we again celebrated founder's day with more than 5000 of our employees participating.

Perry Sook: They work benefited 241 community service organizations are public charities by helping with meal prep preparation building of houses school backpack hygiene kit assemblies trash collections and blood donation among other activities. In addition, we also raised nearly $150000 on behalf of these community service organizations.

Perry Sook: On the corporate governance front, subject to quarter end, we announce the appointment of Ellen Johnson, Executive Vice President and CFO of the Interpublic Group of Companies, to our Board of Directors. As many of you know, IPG is one of the world's leading providers of marketing and advertising solutions, and Ellen has served as an integral member of IPG's executive team for many years. Her extensive financial and advertising industry experience, coupled with her expertise in all areas of ESG and information technology, which she oversees at IPG, will be invaluable to Nexstar as we continue to advance our business and execute on the company's goals to enhance shareholder value.

Speaker Change: On the corporate governance front subject to quarter end, we announced the appointment of Alan Johnson Executive Vice President and CFO of Interpublic group of companies to our board of directors as many of you know IPG is one of the world's leading providers of marketing and advertising solutions and Ellen has served as an integral member of Ipg's executive team for many.

Speaker Change: Years.

Speaker Change: Her extensive financial and advertising industry experience, coupled with her expertise in all areas of ESG and information technology, which he oversees that IPG will be invaluable to the nexstar as we continue to advance our business and execute on the company's goals to enhance shareholder value.

Perry Sook: Ellen will join our board effective October 1st, and once Ellen joins, our board will be back to ten members, of which nine will be independent, and three will be women. Our unmatched competitive attributes provide Nexstar with the financial strength and operating leverage to support our strategy as we pursue several substantial growth opportunities ahead of us. Finally, our confidence in our future is underscored by our board's recent approval of a new $1.5 billion share repurchase authorization. With all of that said, I will turn the call over to Mike.

Perry Sook: Everyone will join our board effective October 1st and once Alan joins our board will be back to 10 members of which nine will be independent and three will be women.

Perry Sook: Before I turn it over to Mike, let me make a final comment. We have a differentiated business and cash-generative operating model underpinned by strong execution and the unique scale of our local and national media assets. Our unmatched competitive attributes provide Nexstar with the financial strength and operating leverage to support our strategy as we pursue several substantial growth opportunities ahead of us. Finally, our confidence in our future is underscored by our board's recent approval of a new $1.5 billion share repurchase authorization. With all of that said, let me turn the call over to Mike.

Perry Sook: Before I turn it over to Mike Let me make a final comment we have a differentiated business and cash generative operating model underpinned by strong execution and the unique scale of our local and national media assets are unmatched competitive attributes provide nexstar with the financial strength and operating leverage to support our strategy as we pursue several substantial.

Mike: Growth opportunities ahead of us.

Perry Sook: Finally, our confidence in our future as underscored by our boards recent approval of a new $1 $5 billion share repurchase authorization.

Perry Sook: With all of that said, let me turn the call over to Mike.

Michael Biard: Thanks Perry and good morning everyone. As Perry referenced, we delivered record second quarter net revenue of $1.27 billion compared to $1.24 billion in the prior year quarter. All of this is testament to the power of our content, scale, and strategy. Turning to advertising, Second quarter advertising revenue increased 2.2% compared to the prior year, reflecting a year-over-year increase in political advertising, which more than offset a reduction in non-political advertising. Non-political advertising improved sequentially from a 7% year-over-year decline in Q1 2024 to a 4.7% year-over-year decline in the second quarter.

Mike Baird: Thanks, Perry, and good morning everyone. As Perry referenced, we delivered record second quarter net revenue of $1.27 billion compared to $1.24 billion in the prior year quarter. The 2.3% increase in net revenue was primarily due to growth in distribution revenue and advertising revenue driven by politics. All-time high second quarter distribution revenue grew 5.5% to $734 million, primarily due to contract renewals on terms favorable to the company and annual rate escalators, growth in VMVPD subscribers, the addition of CW affiliations to certain of our stations, and the return of our partner stations on one MVPD, all of which more than offset MVPD subscriber attrition.

Mike: Thanks, Perry and good morning, everyone as Perry referenced we delivered record second quarter net revenue of $1 7 billion compared to <unk>, two 4 billion in the prior year quarter.

Mike Byrd: The two 3% increase in net revenue was primarily due to growth distribution revenue and advertising revenue driven by political.

Michael Biard: All time high second quarter distribution revenue grew five 5% to $734 million.

Speaker Change: Primarily due to contract renewals on terms favorable to the company and annual rate escalators growth and V and V. PD subscribers. The addition of CW affiliations to certain of our stations and the return of our partner stations on one mvpds all of which more than offset mvpds subscriber.

Michael Biard: Attrition.

Mike Baird: Excluding the removal of partner stations from certain MVPDs last year, our subscribers grew in the low single-digit range, reflecting the benefit of the new launches of our CW, MyNetworkTV, and independent stations on YouTube TV and other VMVPDs, the addition of new CW affiliations to Nexstar stations, and recent station acquisitions. Zooming out on our distribution business for some perspective, over the last renewal cycle, we made tremendous progress completing distribution and network affiliation agreements on favorable terms while expanding distribution of our Nexstar-owned national networks, including the CW and NewsNation.

Michael Biard: Excluding the removal of partner stations from certain Mvpds last year, our subscribers grew in the quarter in the low single digit range, reflecting the benefit of the new launches of our CW My network television and the independent stations on Youtube TV and other <unk>. The addition of new <unk>.

Speaker Change: Affiliations to Nexstar stations and recent station acquisitions.

Speaker Change: Zooming out on our distribution business for some perspective over the last renewal cycle, we made tremendous progress completing distribution and network affiliation agreements on favorable terms, while expanding distribution of our nexstar owned national networks, including the CW and news nation.

Mike Baird: All of this is testament to the power of our content, scale, and strategy. As a result, our net distribution revenues grew in the high single-digit percentage range this quarter. And, as you know, we announced an agreement to renew the CBS affiliations with our own and our partner stations.

Michael Biard: All of this is testament to the power of our content scale and strategy as a result, our net distribution revenues grew in the high single digit percentage range this quarter and.

Speaker Change: And as you know, we announced an agreement to renew the CBS affiliations with ours and our partner stations.

Mike Baird: Turning to advertising, second quarter advertising revenue increased 2.2% compared to the prior year, reflecting a year-over-year increase in political advertising which more than offset a reduction in non-political advertising. Non-political advertising improved sequentially from a 7% year-over-year decline in Q1 2024 to a 4.7% year-over-year decline in the second quarter. So far in Q3 2024, non-political advertising trends continue to improve sequentially. We are seeing a slower all-in rate of decline versus the second quarter, as we are currently pacing down in the low single digits in the third quarter, year over year, with the impact of the Olympics aiding this pace.

Michael Biard: Turning to advertising.

Michael Biard: Second quarter advertising revenue increased two 2% compared to the prior year.

Michael Biard: Reflecting a year over year increase in political advertising, which more than offset a reduction in non political advertising.

Michael Biard: Non political advertising improved sequentially from a 7% year over year decline in Q1, 2024 to a four 7% year over year decline in the second quarter.

Michael Biard: So far in Q3 2024, non-political advertising trends continue to improve sequentially. We are seeing a slower all-in rate of decline versus the second quarter as we are currently pacing down in the low single digits in the third quarter, year over year, with the impact of the Olympics aiding this pacing, which is consistent with our expected market share for the full year.

Michael Biard: So far in Q3 2020 for nonpolitical advertising trends continued to improve sequentially.

Michael Biard: We are seeing a slower all in rate of decline versus the second quarter. As we are currently pacing down in the low single digits in the third quarter year over year with the impact of the Olympics aiding this pacing.

Mike Baird: While we are encouraged by these trends, we continue to be impacted by a challenging advertising market. As political advertising increases through Election Day, especially in September and October, we expect to see some displacement or crowding out of non-political revenue. Turning to politics, in the second quarter, political advertising of $45 million increased by $37 million year-over-year and was more than double that of 2020 when we generated $22 million in the same period.

Michael Biard: While we are encouraged by these trends, we continue to be impacted by a challenging advertising market.

Michael Biard: Political advertising increases through election day, especially in September and October we expect to see some displacement or crowd out of non political revenue.

Michael Biard: Turning to political in the second quarter political advertising of $45 million increased by $37 million year over year and was more than double that of 2020, when we generated $22 million in the same period.

Mike Baird: We estimate our market share of total political television spending year-to-date was in the low teens, which is consistent with our expected market share for the full year. While we generate most of our political advertising revenue from Senate, House, gubernatorial races, and ballot initiatives, a competitive presidential race is always incrementally positive, especially when there is an intense battle for control of both the Senate and House. Of course, President Biden's decision to pass the baton to Vice President Harris kept the existing Biden-Harris fundraising in place, seemingly galvanizing both parties and driving meaningful incremental fundraising that will ultimately flow back into political advertising.

Michael Biard: We estimate our market share of total political television spending year to date was in the low teens.

Michael Biard: Which is consistent with our expected market share for the full year.

Michael Biard: While we generate most of our political advertising revenue from Senate house gubernatorial races and ballot initiatives.

Michael Biard: Competitive presidential race is always incrementally positive, especially when there is an intense battle for control of both the Senate and house.

Michael Biard: Of course, President Biden's decision to pass the baton to Vice President Harris kept the existing Biden-Harris fundraising in place. It seems to be galvanizing both parties and driving meaningful incremental fundraising that will ultimately flow back into political advertising. Our focused approach to optimizing the political advertising opportunity, combined with our scaled presence in markets representing the substantial majority of contested races, continues to position Nexstar to maximize the political revenue opportunity. As America's largest local broadcasting company, we have the unique scale and resources to produce and distribute the most comprehensive political news and live debate coverage in our market, as well as comprehensive national reporting on NewsNation and The Hill, America's number one political news site for inside-the-beltway politics.

Speaker Change: Of course, President binding decision to pass pass the Baton to Vice President Harris kept the existing Biden Harris fundraising in place.

Michael Biard: Anyway, galvanizing, both parties and driving meaningful incremental fund raising that ultimately will flow back into political advertising.

Mike Baird: Our focused approach to optimizing the political advertising opportunity, combined with our scaled presence in markets representing the substantial majority of contested races, continues to position Nexstar to maximize the political revenue opportunity. As America's largest local broadcasting company, we have the unique scale and resources to produce and distribute the most comprehensive political news and live debate coverage in our market, as well as comprehensive national reporting on NewsNation and The Hill, America's number one political news site for inside-the-beltway politics.

Michael Biard: Our focused approach to optimizing the political advertising opportunity combined with our scaled presence in markets representing the substantial majority of contested races continues to position nexstar to maximize the political revenue opportunity.

Michael Biard: As America's largest local broadcasting company, we have the unique scale and resources to produce and distribute the most comprehensive political news and live debate coverage in our markets as well as comprehensive national reporting on news nation, and the Hill America's number one political new site for inside the Beltway policy.

Michael Biard: <unk>.

Mike Baird: You will continue to see plenty of engaging, journalism-first, political programming from us during this election cycle, and we look forward to bringing voters continuing objective and impartial coverage. And, as Perry mentioned, with the accelerated move to 24--7 news, NewsNation has demonstrated its capacity to cover breaking news any day of the week on par with its peers at the most established news network. As a reflection of our journalists' talent, Nexstar and its partner stations earned 35 regional Edward R. Murrow awards from the Radio-Television Digital News Association, including recognition for overall excellence, breaking news coverage, and newscasts.

Michael Biard: You will continue to see plenty of engaging journalism first political programming from us during this election cycle and we look forward to bringing voters continuing objective and impartial coverage.

Speaker Change: And as Perry mentioned with the accelerated move to $24 Seven News news nation has demonstrated its capacity to cover breaking news any day of the week on par with its peers at the most established news networks.

Michael Biard: As a reflection of our journalists talent Nexstar and its partner stations earned 35 regional Edward R. Murrow Awards from the radio television Digital News Association, including recognition for overall excellence breaking news coverage and newscast.

Michael Biard: Our newsrooms produce fact-based and even-handed coverage every day at scale, and Nexstar's high standards of journalistic integrity enable us to develop and maintain trusted relationships with our audiences and communities. We have incredible accomplished teams in each of our businesses, and we continue to execute well against our plan, delivering strong revenues, adjusted EBITDA, and adjusted free cash flow.

Mike Baird: Our newsrooms produce fact-based and even-handed coverage every day at scale, and Nexstar's high standards of journalistic integrity enable us to develop and maintain trusted relationships with our audiences and communities. This balanced approach at our stations and at NewsNation is recognized by independent watchdog groups, including ADFONTA. In summary, we remain focused on managing our business through the advertising market recovery, and we remain confident about the outlook for politics, having generated over half a billion dollars of revenue in each of the last two cycles.

Michael Biard: Our newsrooms produce fact based and even handed coverage every day at scale and Nexstar has high standards of journalistic integrity enable us to develop and maintain trusted relationships with our audiences and communities.

Michael Biard: This balanced approach at our station and at news nation as recognized by independent watchdog groups, including AD Fontes.

Michael Biard: In summary, we remain focused on managing our business through the advertising market recovery and we remain confident about the outlook for political having generated over half a billion dollars of revenue in each of the last two cycles.

Mike Baird: We have incredible accomplished teams in each of our businesses, and we continue to execute well against our plan, delivering strong revenues, adjusted EBITDA, and adjusted free cash flow. With that, it's my pleasure to turn the call over to Leigh Ann for the remainder of the financial review. Leigh Ann? Thank you, Mike.

Michael Biard: We have incredible accomplished teams in each of our businesses and we continue to execute well against our plan delivering strong revenues adjusted EBITDA and adjusted free cash flow.

Michael Biard: With that it's my pleasure to turn the call over to Leann for the remainder of the financial review.

Leanne Gliha: Thank you, Mike, and good morning, everyone. Mike gave you most of the details on the revenue side, so I'll provide a review of expenses, adjusted EBITDA, and adjusted free cash flow, along with a review of our capital allocation activity. Included in our calculation of adjusted EBITDA, but not included in direct operating and SG&A expenses, are the payments for broadcast rights at our stations, which declined by $6 million in Q2, due primarily to reduced reliance on syndicated content at NewsNation as we transition to 24-7 news.

Leanne Gliha: Thank you, Mike, and good morning, everyone. Mike gave you most of the details on the revenue side, so I'll provide a review of expenses, adjusted EBITDA, and adjusted free cash flow, along with a review of our capital allocation activities. Together, second quarter direct operating and SG&A expenses, excluding depreciation and amortization and corporate expenses, decreased by $17 million, or increased by $17 million, or 2%. The increase was primarily due to the expansion of news programming, direct digital operating expenses, as well as various administrative expenses, offset in part by a reduction in severance by the CW by $4 million.

Speaker Change: Thank you Mike and good morning, everyone. Mike gave you most of the details on the revenue side to provide a review of expenses adjusted EBITDA and adjusted free cash flow along with a review of our capital allocation activity.

Leanne Gliha: Also included in our calculation of adjusted EBITDA, but not included in direct operating and SGA expenses, is the amortization of broadcast rights related to the CW, effectively the CW's programming expenses, which declined by $49 million year-over-year, from $120 million in the second quarter of 2023 to $71 million in Q2-24, as we continue to reduce our programming expenses. Q2 2024 total corporate expense was $54 million, including non-cash compensation expense of $20 million, compared to $49 million, including non-cash compensation expense of $13 million, in the second quarter of 2023.

Leanne Gliha: Included in our calculation of adjusted EBITDA, but not included in direct operating and SG&A expenses, are the payments for broadcast rights at our stations, which declined by $6 million in Q2, due primarily to reduced reliance on syndicated content at NewsNation as we transition to 24-7 news. Also included in our calculation of adjusted EBITDA but not included in direct operating and SGA expenses is the amortization of broadcast rights related to the CW, effectively the CW's programming expenses, which declined by $49 million year over year from $120 million in the second quarter of 2023 to $71 million in Q2-24 as we continue to reduce our programming expenses.

Leanne Gliha: Together second quarter direct operating and SG&A expenses, excluding depreciation and amortization and corporate expenses decreased by $17 million increased by $17 million or 2%. The increase was primarily due to the expansion of new programming direct digital operating expenses as well as various administrative expenses.

Leanne Gliha: That in part by a reduction in severance by.

Leanne Gliha: By the CW.

Leanne Gliha: Included in our calculation of adjusted EBITDA, but not included in direct operating and SG&A expenses are the payments for broadcast rights at our stations, which declined by $6 million in Q2, due primarily to reduced reliance on syndicated content nation as we transition to $20 7 million.

Leanne Gliha: Also included on our calculation of adjusted EBITDA, but not included in direct operating and SG&A expenses is the amortization of broadcast rights related to the CW effectively the CW programming expenses, which declined by $49 million year over year from $120 million in the second quarter of 2023 to <unk> $71 million in Q2.

Leanne Gliha: <unk> 24, as we continued to reduce our programming expenses Q.

Leanne Gliha: Q2 2024 total corporate expense was $54 million, including non-cash compensation expense of $20 million, compared to $49 million, including non-cash compensation expense of $13 million, in the second quarter of 2023. The increase of $5 million is primarily due to new restricted stock grants and the timing of grants, offset in part by reduced legal fees and other administrative expenses. Q2 2024 depreciation and amortization was $208 million versus $262 million in the prior year quarter, a reduction of $54 million due primarily to lower programming expenses at the CW I described a moment ago.

Leanne Gliha: Q2, 2024, total corporate expense was $54 million, including noncash compensation expense of $20 million compared to $49 million, including noncash compensation expense of $13 million in the second quarter of 2023, the increase of $5 million is primarily due to new restricted stock grants and the timing of grant offsetting.

Leanne Gliha: The increase of $5 million is primarily due to new restricted stock grants and the timing of grants, offset in part by reduced legal fees and other administrative expenses. Q2 2024 depreciation and amortization was $208 million versus $262 million in the prior year quarter, a reduction of $54 million due primarily to lower programming expenses at the CW I described a moment ago. Please note that the CW's programming costs, which are included in our definitions of adjusted EBITDA and adjusted free cash flow, are accounted for in this line item as, quote, amortization of broadcast rights.

Leanne Gliha: Part by reduced legal fees and other administrative expenses.

Leanne Gliha: Q2, 2020 for depreciation and amortization with 208 million versus $262 million in the prior year quarter, a reduction of $54 million due primarily to lower programming expenses at the CW I described a moment ago. Please note that the CW programming cost, which are included in our definition of adjusted EBITDA and adjusted free cash flow are accounted for.

Leanne Gliha: Please note that the CW's programming costs, which are included in our definitions of adjusted EBITDA and adjusted free cash flow, are accounted for in this line item as, quote, amortization of broadcast rights. For more information about this amount, please refer to the schedules in our earnings release and in our 10-key. We received $19 million in Q2 distributions from equity investments related to our 31% ownership of TV Food Network, which represents a 27% decrease from the prior year quarter. The reduced amount reflects lower income at TV Food Network, related primarily to lower advertising revenue.

Leanne Gliha: In this line item as quote amortization of broadcast right.

Leanne Gliha: For more information about this amount please refer to the schedules in our earnings release and in our 10-Q.

Leanne Gliha: We received $19 million in Q2 distributions from equity investments related to our 31% ownership of TV Food Network, which represents a 27% decrease from the prior year quarter. The reduced amount reflects lower income at TV Food Network, related primarily to lower advertising revenue.

Leanne Gliha: We received $19 million in Q2 distributions from equity investments related to our 31% ownership in TV food network, which represents a 27% decrease from the prior year quarter that reduced amount reflects lower income at TV food network related primarily to lower advertising revenue.

Leanne Gliha: Putting it all together, on a consolidated basis, second quarter adjusted EBITDA was $398 million, which represented a 31.4% margin, an increase of $63 million from the second quarter 2023 adjusted EBITDA of $335 million and an increase in margin of 440 basis points from the Q2 2023 margin of 27%. This margin improvement is due, in part, to an improvement in our net distribution margin year over year. Second quarter net interest expense increased to $113 million from $111 million in the prior year due to higher SOFR rates applicable to our floating rate debt.

Leanne Gliha: Putting it all together, on a consolidated basis, second quarter adjusted EBITDA was $398 million, which represented a 31.4% margin, an increase of $63 million from the second quarter 2023 adjusted EBITDA of $335 million and an increase in margin of 440 basis points from the Q2 2023 margin of 27%. This margin improvement is due, in part, to an improvement in our net distribution margin year over year. Second quarter CapEx was $37 million compared to $41 million in the second quarter of last year, a decrease of $4 million due primarily to a reduced capital expenditure plan for the year.

Leanne Gliha: Putting it all together on a consolidated basis second quarter. Adjusted EBITDA was $398 million represented a $34 31, 4% margin an increase of $63 million from the second quarter 2023, adjusted EBITDA of $335 million and an increase in margin of 440 basis points.

Leanne Gliha: From the Q2 2023 margin of 27%. This margin improvement is due in part to improvements in our net distribution margin year over year.

Leanne Gliha: Second quarter, Capex was $37 million compared to $41 million in the second quarter of last year, a decrease of $4 million due primarily to our reduced capital expenditure plan for the year second.

Leanne Gliha: Second quarter net interest expense increased to $113 million from $111 million in the prior year due to higher SOFR rates applicable to our floating rate debt. Cash interest expense was $110 million for the quarter. Second quarter operating cash taxes were $164 million compared to $119 million in 2023, due primarily to estimated tax payments for 2024 reflecting a higher expected pre-tax income than in 2023. Payments for capitalized software obligations, net proceeds from disposal of assets, and insurance recoveries were $9 million versus $4 million last year.

Leanne Gliha: Second quarter net interest expense increased to $113 million from $111 million in the prior year due to higher silver rate applicable to our floating rate debt cash interest expense was $110 million for the quarter.

Leanne Gliha: Cash interest expense was $110 million for the quarter. Second quarter operating cash taxes were $164 million compared to $119 million in 2023, due primarily to estimated tax payments for 2024 reflecting a higher expected pre-tax income than in 2023. Payments for capitalized software obligations, net proceeds from the disposal of assets, and insurance recoveries were $9 million versus $4 million last year. I'm putting this all together consolidated second quarter 2024 adjusted free cash flow of $78 million as compared to $74 million last. Together with the cash from operations generated in the quarter and cash on hand, we returned $190 million to shareholders, comprised of $55 million in dividends and the repurchase of $135 million of stock at an accretive average price of $159.21, reducing shares outstanding net of equity vestings by 1.7%

Leanne Gliha: Second quarter operating cash taxes were $164 million compared to $119 million in 2023, due primarily to estimated tax payments for 2024, reflecting a higher expected pre tax income than in 2023 payments for capitalized software obligations net of proceeds from disposal of assets and insurance recoveries were $9 million versus $4 million last year.

Leanne Gliha: I'm putting this all together, consolidated second quarter 2024 adjusted free cash flow of $78 million as compared to $74 million last. Together with the cash from operations generated in the quarter and cash on hand, we returned $190 million to shareholders, comprised of $55 million in dividends and the repurchase of $135 million of stock at an accretive average price of $159.21, reducing shares outstanding net of equity vestings by 1. Nexstar's outstanding debt at June 30, 2024 was $6.8 billion, down slightly for the quarter as we made quarterly amortization payments of $31 million.

Leanne Gliha: I'm, putting this altogether consolidated second quarter 2024, adjusted free cash flow was $78 million as compared to $74 million last year.

Leanne Gliha: Together with the cash from operations generated in the quarter and cash on hand, we returned $190 million to shareholders comprised of $55 million in dividends and the repurchase of $135 million of stock at an accretive average price of $159 21.

Leanne Gliha: Using shares outstanding net of equity investing by one 7% Nextera.

Leanne Gliha: Nexstar's outstanding debt at June 30, 2024 was $6.8 billion, down slightly for the quarter as we made quarterly amortization payments of $31 million. Our cash balance at quarter end was $146 million, including $45 million of cash related to the CW. As is typical in political years, we expect leverage, which we calculate on an LTM basis versus the two-year average, to fall during 2024.

Leanne Gliha: <unk> outstanding debt at June 32024 was $6 8 billion down slightly for the quarter as we made quarterly amortization payments of $31 million.

Leanne Gliha: Our cash balance at quarter-end was $146 million, including $45 million of cash related to CW. Because we designated CW as an unrestricted subsidiary, the losses associated with CW are not accounted for in our calculation of leverage for purposes of our credit agreement. As such, our net first lien covenant ratio for Nexstar, excluding CW, at June 30, 2024, was 2.19 times, which is well below our first lien and only covenant of 4.25 times.

Leanne Gliha: Our cash balance at quarter end was $146 million included $45 million of cash related to the CW.

Leanne Gliha: Because we designated the CW, an unrestricted subsidiary the losses associated with the CW are not accounted for in our calculation of leverage for purposes of our credit agreement.

Leanne Gliha: As such our net Levered, our net first lien covenant ratio for Nexstar, excluding CW at June 32024, with $2, one nine times, which is well below our first lien and only covenant of four to five times. Our total net leverage for Nexstar, excluding CW was $3 six nine times at quarter end.

Leanne Gliha: Our total net leverage for Nexstar, excluding CW, was 3.69 times a quarter end. As is typical in political years, we expect leverage, which we calculate on an LTM basis versus a two-year average, to fall during 2024, as Justin Bieber's dove rose with election-year political advertising.

Leanne Gliha: As is typical in political years, we expect leverage which we calculate on an LTM basis versus the two year average to fall during 2024 as adjusted EBITDA grows with election year political advertising as.

Operator: As we move forward, we continue to strategically deploy our cash in a manner that is consistent with our commitment to creating the highest shareholder value. And with that, I'm going to open up the call for questions. Operator, can you go to our first question?

Leanne Gliha: As we move forward, we continue to strategically deploy our cash in a manner that is consistent with our commitment to creating the highest shareholder value.

Operator: And with that I'm going to open up the call for questions. Operator can you go to our first question.

Operator: Thank you. Our first question is from Benjamin Soff with Deutsche Bank. Please proceed with your question.

Speaker Change: Thank you.

Speaker Change: Our first question is from Benjamin <unk> with Deutsche Bank. Please proceed with your question.

Benjamin Soff: Hey guys, good morning. And thanks for the question.

Perry Sook: Hey guys, good morning and thanks for the question. I wanted to start with politics and just get your updated thoughts on, you know, what you think you can do in that business given the changes in the presidential election and the activity that that generated. And then I wanted to follow up on advertising. Can you drill down a bit more on the core advertising performance and, in particular, what you are seeing on the national and local sides compared to maybe what you were expecting as of the last call? Thanks.

Benjamin Soff: Hey, guys. Good morning, and thanks for the question I wanted to start on political and just get your updated thoughts on what do you think you can do in that business given the.

Speaker Change: Changes in the presidential election, and the activity that that drove.

Benjamin Soff: And then I wanted to follow up on advertising can you drill down a bit more into the core advertising performance and in particular, what you were seeing on the national and local side compared to maybe what you were expecting as in the last call. Thanks.

Perry Sook: I wanted to start with politics and just get your updated thoughts on, you know, what do you think you can do in that business, given the changes in the presidential election and the activity that that has driven. And then I wanted to follow up on advertising. Can you drill down a bit more into the core advertising performance, and in particular, what you were seeing on the national and local sides compared to, maybe, what you were expecting as of the last call? Thanks.

Perry Sook: Sure, I'll start with politics. I saw that BIA independently raised their political spending projection for the year to yesterday by $560 million to $11.7 billion for 2024, which would represent a 21.3% increase over the last general election that took place in 2020. I would note that as of today, we're less than 90 days until the general election, and we're less than 30 days until early voting starts in some states. But the fundraising, our advanced bookings, everything is ahead of our plan and ahead of our expectations.

Speaker Change: Sure I'll start with political I.

Speaker Change: I saw that.

Speaker Change: Independently raise their political spending projections for the year to yesterday up by $560 million to $11 7 billion for 2024.

Perry Sook: Which would represent a 21, 3% increase over the last general election took place in 2020.

Perry Sook: I would note that as of today, we are less than 90 days until the general election and were less than 30 days until early voting starts in some states.

Perry Sook: But the fund raising our advanced bookings everything are ahead of our plan and ahead of our expectations.

Perry Sook: And so we're not really going to adjust the forecast on politics because the money won't really start to fall in intensity, or increase in intensity, fall to our books and bottom line until after Labor Day. But as I'm often fond of saying, if I were a betting man, I'd probably bet the O.

Perry Sook: And so we're not really going to adjust the forecast on politics because the money won't really start to fall in intensity, you know, or increase in intensity, fall to our books and bottom line until after Labor Day. But as I'm often fond of saying, if I were a betting man, I'd probably bet the O.

Perry Sook: And so we're not really going to adjust our forecast on political.

Perry Sook: Because the money won't really start to fall in.

Perry Sook: Intensity or increase in intensity fall through our books and Bottomline until post labor day.

Perry Sook: But as.

Perry Sook: As I've, often fond of saying if I were a betting man I would probably bet the over.

Perry Sook: As it relates to advertising, if I look at the quarter on core advertising, our lagging categories, if you will, were furniture, automotive, and entertainment, home repair, and banks, package goods, real estate, even gaming, and sports betting were all up for the quarter. I think there's no question that the slowdown in the economy is leading to a shift in discretionary spending and perhaps a slowdown in discretionary spending. So, you know, we are encouraged that our Q3 projections or Q3 pacing is better than where we finished in Q2, but as Mike said in his comments, you know, we do expect as we get closer to November the 5th that we'll see some crowding out as general purpose advertisers compete with political advertising for the same inventory.

Perry Sook: As it relates to advertising, if I look at the quarter on core advertising, our lagging categories, if you will, were furniture, automotive, and entertainment, home repair, and banks, packaged goods, real estate, even gaming, and sports betting were all up for the quarter. I think there's no question that the slowdown in the economy is leading to a shift in discretionary spending and perhaps a slowdown in discretionary spending. So, you know, we are encouraged that our Q3 projections or Q3 pacing is better than where we finished in Q2, but as Mike said in his comments, you know, we do expect as we get closer to November the 5th that we'll see some crowding out as general purpose advertisers compete with political advertising for the same inventory.

Speaker Change: As it relates to advertising if I look at the quarter on core advertising.

Perry Sook: Our our lagging categories, if you will where furniture automotive and entertainment.

Perry Sook: Home repair and banks packaged goods real estate, even gaming sports betting were all up for the quarter.

Perry Sook: I think Theres no question that.

Perry Sook: The slowdown in the economy is leading to.

Perry Sook: The shift in discretionary spending and perhaps a slowdown in discretionary spending so.

Perry Sook: We are encouraged that our Q3.

Mike: Projections are Q3 pacing is better than where we finished in Q2.

Perry Sook: But as Mike said in his comments, we do expect as we get closer to November the fifth that we will see some crowd out.

Mike: As general purpose advertisers compete with political advertising for the same inventory and so we budgeted and planned for that but again, our pacing is for the third quarter on core is better than it was in the in the second quarter.

Perry Sook: And so, you know, we budgeted and planned for that. But again, our pacing for the third quarter on core is better than it was in the second quarter. And obviously, national is more volatile and therefore was pacing weaker than local, which is more sticky and more relationship driven. Direct response was down again, I think, dealing with the discretionary purchasing ability of the consumer. So, you know, all in all, you know, it's about as planned.

Perry Sook: And so, you know, we budgeted and planned for that, but again, our pacing for the third quarter on core is better than it was in the second quarter. And, you know, obviously, national is more volatile and therefore was pacing weaker than local, which is more sticky and more relationship-driven. Direct response was down, again, I think, dealing with, you know, the discretionary purchasing ability of the consumer. So, all in all, it's about as planned.

Perry Sook: Obviously national is.

Speaker Change: As more.

Perry Sook: The volatile and therefore was pacing weaker than local which is more sticky and more relationship driven.

Perry Sook: Direct response was down again, I think dealing with.

Perry Sook: Discretionary purchasing ability of the consumer so all in.

Perry Sook: It's about as planned.

Perry Sook: And, you know, we were happy to see that our digital advertising revenue, both from direct accounts and from national accounts, and our digital services revenue were all up in Q2 and are pacing substantially ahead, double digits ahead of the prior year in Q3.

Perry Sook: And we were happy to see that our digital.

Perry Sook: Advertising revenue both from direct accounts and from from National accounts in our digital services revenue were all up.

Perry Sook: In Q2 and are pacing substantially ahead double digits ahead.

Perry Sook: Prior year in Q3, so I think in a very general way Thats hopefully the answer to your question.

Perry Sook: So I think, in a very general way, that's hopefully the answer to your question. Okay, yeah, super helpful. Thanks.

Perry Sook: Okay, yeah, super helpful. Thanks, guys.

Benjamin Soff: Okay, yeah, super helpful. Thanks, guys.

Speaker Change: Okay Super helpful. Thanks, guys.

Operator: Thank you. Our next question is from Dan Kornos with Benchmark. Please proceed with your question.

Operator: Thank you. Our next question is from Dan Kurnos with Benchmark. Please proceed with your question.

Dan <unk>: Thank you. Our next question is from Dan <unk> with benchmark. Please proceed with your question.

Dan Kornos: Yeah, thanks. Good morning.

Mike Baird: Yeah, thanks. Good morning.

Dan Kornos: Yes, thanks, good morning.

Dan Kornos: Just quickly on subs I appreciate the color in the quarter, just any updated thoughts on trajectory or trends on the retrans side and certainly given your guys' unique situation and then maybe Mike I guess, just given everything we've heard from the Upfronts and the progress you guys have made on CW ratings and clearly the news nation evolution.

Michael Biard: Maybe just quickly on subs; appreciate the color in the quarter. Just any updated thoughts on trajectory or trends on the retrend side and certainly given your guys' unique situation. And then maybe, Mike, I guess just given everything we've heard from the front and the progress you guys have made on CW ratings and clearly, the News Nation, Evolution, and Perry too, obviously, just how we should think about sort of the improvements to CPMs, to engagement, just anything you can give us on color there going forward would be helpful to understand the macro background. I think on subs, as we've said in the past, we're not going to...

Mike Baird: Maybe just quickly on subs; appreciate the color in the quarter. Just any updated thoughts on trajectory or trends on the retrend side and certainly given your guys' unique situation. And then maybe, Mike, I guess just given everything we've heard from the front and the progress you guys have made on CW ratings and clearly, the News Nation, Evolution, and Perry too, obviously, just how we should think about sort of the improvements to CPMs, to engagement, just anything you can give us on color there going forward would be helpful with the macro background. I think on subs, as we've said in the past, we're not going to...

Michael Biard: And Perry to obviously, just how we should think about sort of the improvements to CPM to engagement just anything you can give us some color there going forward will be helpful. Understanding the macro backdrop. Thank you.

Michael Biard: So I think on subs, as we've said in the past, we're not going to pace materially differently from the rest of the marketplace, so I don't really have anything new to add there. On the up front, all in, a positive up front in terms of growth, particularly given the amount of additional inventory that we're bringing to the market. As you would expect, sports attracted significant interest, and, you know, while our take is very small compared to the others, this was, you know, only our second year going to market with a consolidated Nexstar portfolio of CW Sports, CW Entertainment, and NewsNation, our multicast networks.

Mike Baird: So I think on subs, as we've said in the past, we're not going to pace materially differently from the rest of the marketplace, so I don't really have anything new to add there. On the up front, all in, a positive up front in terms of growth, particularly given the amount of additional inventory that we're bringing to the market. As you would expect, sports attracted significant interest, and, you know, while our take is very small compared to the others, this was, you know, only our second year going to market with a consolidated Nexstar portfolio of CW Sports, CW Entertainment, and News Nation, our multicast networks.

Speaker Change: So I think on subs as we've said in the past, we're not going to pace materially differently than the rest of the marketplace. So I don't really have anything new to add there on the upfront.

Michael Biard: All in a positive upfront in terms of growth, particularly given the amount of additional inventory that were bringing into the market.

Michael Biard: As you would expect sports attracted significant interest and while our take is very small compared to the others.

Michael Biard: This was our only our second year going to market with the consolidated Nexstar portfolio of CW Sports <unk> Entertainment News nation, our multicast networks.

Michael Biard: And I think what the team saw is it's a very differentiated offering from what our competitors are going to market with. And, in fact, we're one of the only groups out there with a linear growth story to tell. Our assets are attractive to advertisers in the upfront as we continue to grow our much-coveted live sports at the CW. We'll be airing over 500 hours of sports programming in the coming year, including live golf, ACC football and basketball, Pac-12 football, NASCAR Xfinity racing, and the WWE NXT series.

Mike Baird: And I think what the team saw is it's a very differentiated offering from what our competitors are going to market with. And, in fact, we're one of the only groups out there with a linear growth story to tell. Our assets are attractive to advertisers in the upfront as we continue to grow our much-coveted live sports at the CW. We'll be at over 500 hours of sports programming in the coming year, including LiveGolf, ACC Football and Basketball, Pac-12 Football, NASCAR Exfinity Racing, and the WWE NXT series.

Michael Biard: And I think what the team size, it's a very differentiated offering from what our competitors are going to market with and in fact, we're one of the only groups out there with a linear growth story to tell our assets are attractive to advertisers in the upfront as we continue to grow our much coveted live sports at the CW will be over 500 hours of sports.

Mike Baird: So all in all, we're able to tell a great story around our growing live and independent news content as well. And I think one of the compelling features that is beginning to resonate with advertisers that might have a difficult time with the left and right oriented news organizations that are much larger than we are is that news nations can provide advertisers with a very brand-safe environment at a newscon.

Michael Biard: Programming in the coming year, including live golf, ACC football and basketball Pac 12 football NASCAR Xfinity racing in the WWE NXT series. So all in we're able to tell a great story around our growing alive and independent news content as well and I think one of the compelling features that is beginning to resonate with advertisers that might have a deferred.

Michael Biard: So all in all, we're able to tell a great story around our growing live and independent news content as well. And I think one of the compelling features that is beginning to resonate with advertisers that might have a difficult time with the left and right-oriented news organizations that are much larger than we are is that NewsNation can provide advertisers with a very brand-safe environment in a news context.

Michael Biard: <unk> time, with the left and right oriented news organizations.

Michael Biard: That are much larger than we are that news nation can provide advertisers with a very brand safe environment and a news context.

Speaker Change: Thanks I appreciate it.

Michael Biard: Sure.

Operator: Thank you. Our next question is from Jason Bazinet with Citi. Please proceed with your question. I actually just had a follow-up question: The sports that you have at the CW, do you feel like 500 hours or north of 500 hours is about where you want to be? Or do you think the CW will continue to pivot more in the sports over time?

Operator: Thank you. Our next question is from Jason Bazinet with Citi. Please proceed with your question. I actually just had a follow-up on... The sports that you have at the CW, do you feel like 500 hours or north of 500 hours is about where you want to be, or do you think the CW will continue to pivot more into sports over time?

Speaker Change: Thank you. Our next question is from Jason Bazinet with Citi. Please proceed with your question.

Perry Sook: [inaudible]

Speaker Change: I actually just had a follow up on.

Operator: The sports that you have at the CW do you feel like that 500 hours of north of $500 is about where you want to be.

Speaker Change: Do you think the CDW will continue to pivot more into sports with your time.

Perry Sook: I think it's a good start, and we're happy with where we are, but more is always better. So we will continue to be in the marketplace, and we'll continue to look at opportunities, particularly for rights holders who are attracted to the increased reach that broadcast can offer them. The products that we've attracted, the rights that we've attracted, there's a consistent theme there of rights holders seeking broader reach and the bigger platform that broadcasts can offer them. We expect we'll see more of that in the future.

Perry Sook: I think it's a good start, and we're happy with where we are, but more is always better. So we will continue to be in the marketplace, and we'll continue to look at opportunities, particularly for... you know, rights holders who are attracted to the increased reach that broadcast can offer them. I think when you look at the products that we've attracted, the rights that we've attracted, there's a consistent theme there of rights holders seeking broader reach and a bigger platform that broadcast can offer them. We expect we'll see more of that in the future. And then based on that,

Speaker Change: I think it's a good start and we're happy with where we are but more is always better right. So we will continue to be.

Perry Sook: In the marketplace and we will continue to look at opportunities.

Perry Sook: Particularly for.

Perry Sook: Rightholders, who are attracted to the increased reach that broadcast can offer them I think when you look at the products that we've attracted the rights that we've attracted theres a consistent theme there.

Perry Sook: Rights holders seeking broader reach in.

Perry Sook: And the bigger platform that broadcast can offer them and we expect we'll see more of that in the future.

Perry Sook: And then, based on the CW, based on the progress you've made reducing losses, are you still on track for that sort of 1Q26 break-even? Is that still the plan? Yes, it is still the plan.

Speaker Change: And then based on the CW based on the progress we've made reducing losses youre still on track for that sort of a <unk> 26 breakeven that's still the plan.

Speaker Change: It is still the plan.

Operator: Okay, thank you. Thank you. Our next question is from Craig Huber with Huber Research Partners. Please proceed with your question. Yes, thank you.

Speaker Change: Thank you.

Operator: Okay, thank you. Thank you. Our next question is from Craig Huber with Huber Research Partners. Please proceed with your question. Yes, thank you.

Operator: Thank you. Our next question is from Craig Huber with Huber Research Partners. Please proceed with your question.

Craig Huber: Yes. Thank you.

Mike Baird: Can you talk a little bit about the trend you're seeing out there for national advertising on your TV stations? How did that compare in the second quarter, that trend year-over-year versus the first quarter? What's your sense here for the third quarter?

Craig Huber: Can you talk a little bit about the trend you're seeing out there for national advertising at your TV stations.

Speaker Change: In the second quarter that trend year over year for the first quarter.

Craig Huber: Your sense here for the third quarter.

Mike Baird: On the national side, we're still seeing a higher rate of decline than on the local side. It was slightly better in the second quarter than it was in the first quarter, and I don't think our expectations for the third quarter or where we're pacing currently are in line with where it was in the first and second quarters in terms of the rate of decline.

Craig Huber: On the national side, we're still seeing a higher rate of decline than on the local side. It was slightly better in the second quarter than it was in the first quarter, and I don't think our expectations for the third quarter or where we're pacing currently are in line with where it was in the first and second quarters in terms of the rate of decline.

Operator: Okay.

Speaker Change: National side, we're still seeing a.

Craig Huber: A higher rate of decline and then on the on the local side.

Craig Huber: It was slightly better in the second quarter than it was in the first quarter and I don't think our expectations for the third quarter and where we're pacing currently is slightly in line with kind of where it was in the first and second quarters in terms of rate of decline.

Leanne Gliha: It's about the same, okay. And then you mentioned pacing, I think the ad revenue for the current quarter is down low single digits. That does not take into account, I assume, much political crowding out as we get deeper into this quarter, or does that?

Mike Baird: It's about the same, okay. And then you mentioned pacing, I think the ad revenue for the current quarter is down low single digits. That does not take into account, I assume, much political crowding out as we get deeper into this quarter, or does that?

Speaker Change: So about the same okay.

Speaker Change: You mentioned patients at.

Leanne Gliha: AD revenue.

Speaker Change: Current quarter down.

Speaker Change: Low single digits does that that does not take into account I assume much political crowding out as we get deeper into this this quarter where does that.

Leanne Gliha: I mean, it takes into consideration a little bit of crowding out because the third quarter includes September, but the vast majority of the crowding out effect happens in October, in the black one.

Mike Baird: I mean, it takes into consideration a little bit of crowding out because the third quarter includes September, but the vast majority of the crowding out effect happens in October, in the black one.

Speaker Change: I mean, it takes into consideration a little bit of crowd out because the third quarter includes September but the vast majority of the crowd out if that happens in October.

Speaker Change: And in the fourth quarter.

Leanne Gliha: But I guess I'm asking, the ad revenue that's going to get booked, formally booked in September, that's not on your books right now, is there a risk here that it could be worse than just down those single digits? Oh, yeah. I mean, like if political continues to expand, yeah, there could be a trade-off if our expectations for political increase, that could have a further impact on core, but, you know, based on our current modeling, which includes the crowd audit, as Perry mentioned, it's down those single digits is what we're pacing out for the third quarter.

Speaker Change: But I guess I'm asking the AD revenue, that's going to get booked formally booked in September. This fall on your books right. Now is there a risk here that it could be worse than just down low single digits.

Leanne Gliha: Yes, I mean political continues to expand yes, there could be a trade there could be a trade off if we if our expectation for political increase that could have a further impact on core but based on our current modeling which includes the crowd out as Terry mentioned.

Leanne Gliha: Download single digit.

Speaker Change: While we are pacing up for the third quarter.

Leanne Gliha: I'll just add that that crowd out effect will happen primarily in 7 or 8 states, and we operate across 40 states here, so not every market will receive the same effect from the crowd out. But I think Leigh Ann is exactly right, as political spending goes up, it can crowd out core revenue. The inventory is finite, and it's fungible, so we would be relatively indifferent there. I think we probably make more revenue if political advertising is crowding out general purpose advertising because politicians will generally pay up for the privilege of doing that.

Speaker Change: Okay. Thanks, Greg I'll, just add to that.

Leanne Gliha: That crowd out effect will happen, primarily in seven or eight states and we operate across 40 states here. So not every market will.

Leanne Gliha: We will receive the same.

Leanne Gliha: Effect from from the crowd out so.

Speaker Change: But I think <unk> is exactly right as political goes up it can crowd out core revenue the engine inventory is fine and it's fungible. So.

Leanne Gliha: We would be relatively indifferent there I think we probably make more revenue.

Leanne Gliha: Scribing out general purpose advertising, because political will generally pay up for the privilege of doing so.

Perry Sook: I have two more quick questions, guys. One, auto. Can you just quantify how much that was down in the quarter and what your outlook is for the third quarter?

Speaker Change: I have two more quick questions guys. One auto can you just quantify how much that was down in the quarter outlook is for the third quarter.

Perry Sook: Yeah, I mean, auto was down mid-single digits. You know, we don't project on a by-category basis, but, you know, it is, I'll tell you from a pacing perspective, it's down a little bit more in the third quarter so far than it was in the second.

Perry Sook: Yes.

Speaker Change: Yes, I mean auto was down mid single mid single digit.

Perry Sook: We don't project on a by category basis, but it is I'll tell you from a pacing perspective, it's down a little bit more in the third quarter, so far than than what it was in the second.

Speaker Change: Okay. My final question. Thanks for your time here.

Craig Huber: Okay, my final question, thanks for your time here. Can you give me a ballpark, if you would, what percent of your viewers on your television stations are over the air nowadays?

Speaker Change: Can you give me a ballpark if you would what percent of your viewers under TV stations or over the air Nowadays.

Perry Sook: So, I mean, look, I, you could, there's a variety of different external resources that tell you about that. It's usually you can, it's in the low teens percent of viewership is consuming content over the air. Okay, great. Thanks a lot, guys.

Speaker Change: So I mean look I.

Speaker Change: You can there's a variety of different external resources that tell you about that it's usually in the low teens percentage.

Perry Sook: Of viewership is.

Speaker Change: You mean content over the air.

Perry Sook: Okay, great. Thanks, a lot guys.

Perry Sook: Yes.

Perry Sook: Yeah.

Operator: Thank you. Our next question is from Steven Cahall with Wells Fargo. Please proceed with your question.

Mike Baird: I'll just add that that crowd out effect will happen primarily in 7 or 8 states, and we operate across 40 states here, so not every market will receive the same effect from the crowd out. But I think Leanne is exactly right, as political spending goes up, it can crowd out core revenue. The inventory is finite, and it's fungible, so we would be relatively indifferent there. I think we probably make more revenue if political advertising is crowding out general purpose advertising because politicians will generally pay up for the privilege of doing that.

Speaker Change: Thank you. Our next question is from Steven Kay Hall with <unk>.

Speaker Change: Wells Fargo. Please proceed with your question.

Steven Cahall: Thank you. So based on what you've seen year to date between the CW improving and the expense management and net distribution, and I guess Perry taking the reins on politics, do you foresee any opportunities to increase the adjusted EBITDA guidance that you've given for the year? Or, I guess as well, any risks in terms of how you're tracking towards that range? And then you announced the renewal with Paramount. There have been industry discussions about affiliates trying to move fixed reverse compensation to some more flexible structures.

Steven Cahall: Thank you so based on what you've seen year to date between the CW, improving and the expense management next net.

Steven Cahall: And that distribution and I guess Perry, taking taking the over on political do you foresee any opportunities to the adjusted EBITDA guidance that you've given for the year or I guess as well any any risks in terms of how you're tracking towards that range.

Speaker Change: Then you announced the renewal with Paramount there's been industry discussions about affiliates trying to move fixed reverse compensation to some more flexible structures. I know you added some CW affiliates as well so I'm sure that was a complex renewal not asking you to comment on that one specifically, but how do you kind of see the trends and reverse comp going forward is there.

Steven Cahall: I know you added some CW affiliates as well, so I'm sure that was a complex renewal. Not asking you to comment on that one specifically, but how do you kind of see the trends in reverse comp going forward? Is there any increased flexibility? And then finally, Leigh Ann, just sorry if I missed some of these, but I would love to get cash interest, capex, cash tax, and kind of rough expectations for the year if that's possible. Thank you.

Steven Cahall: Any increase flexibility and then finally, just sorry, if I missed some of these but would love to get cash interest capex cash tax kind of rough expectations for the year. If that's possible. Thank you.

Leanne Gliha: Okay, so on the first question, and then I'll turn it to Mike for the second question on just the guidance. As we said in with our fourth quarter results, we established guidance at that point. We let you guys know that we were not planning on updating that guidance, but we did provide a good long list of disclosure in terms of the things that we took into consideration at the beginning of the year when we established that guidance. So we are not providing any update to that guidance. That's our current process. I'll turn it over to Mike to talk about reverse. Yeah, sure on the

Speaker Change: Okay. So.

Leanne Gliha: On the first question and then I'll turn it to Mike for the second question on just the guidance.

Mike: As we said in.

Mike: Our fourth quarter results, we established guidance at that point.

Leanne Gliha: Let you guys know that we were not planning on updating that guidance, but we did provide a good long list of disclosure in terms of the things that we took into consideration at the beginning of the year when we established that guidance, though.

Mike: We're not providing any any update that guidance that's our that's our current.

Leanne Gliha: Process I'll turn it to Mike to talk about.

Mike: Reverse yes sure.

Michael Biard: Yeah, sure. On the affiliation renewals, to reiterate what we've said, I think the last couple of calls, the Fixed variable, that is one aspect of a multifaceted negotiation, and what we really focus on is the bottom line. So rather than get into any of those specifics, I will sort of address the bottom line, where we continue to see a moderating of the rate of growth of affiliation fees relative to the rate of growth in our distribution revenue.

Leanne Gliha: Thank you. So based on what you've seen here today between the CW improving and the expense management next in net distribution and, I guess, Perry taking the over on politics, do you foresee any opportunities to the adjusted EBITDA guidance that you've given for the year or, I guess, as well, any risks in terms of how you're tracking towards that range? And then you announce the renewal with paramount. There have been industry discussions about affiliates trying to move fixed reverse compensation to some more flexible structures. I know you added some CW affiliates as well.

Mike: Filiation renewals.

Michael Biard: Reiterate what we said I think the last couple of calls.

Mike Baird: So I'm sure that was a complex renewal. I'm not asking you to comment on that one specifically. But how do you kind of see the trends in reverse comp going forward? Is there any increased flexibility? And then, Leon, just sorry if I missed some of these but would love to get cash interest, capex, and cash tax kind of rough expectations for the year if that's possible. Thank you.

Michael Biard: Fixed variable that is one aspect of a multifaceted negotiation and what we really focus on is the bottom line.

Leanne Gliha: Okay, so on the first question, and then I'll turn it to Mike for the second question, on just the guidance. As we said in the fourth quarter results, we established guidance at that point, and we let you guys know that we were not planning on updating that guidance, but we did provide a good long list of disclosure in terms of the things that we took into consideration at the beginning of the year when we established that guidance. So we are not providing any any update to that guidance. That's our current process. I'll turn it to Mike to talk about our reverse. Yeah, sure on the affiliate.

Michael Biard: Other than get into any of those specifics I will sort of address the bottom line, where we continue to see a moderating of the rate of growth of affiliation fees relative to the rate of growth in our distribution revenues.

Mike Baird: Yeah, sure, on the affiliation renewals, to reiterate what we said on the last couple of calls. Fixed variable, that is one aspect of a multifaceted negotiation, and what we really focus on is the bottom line. So rather than get into any of those specifics, I will sort of address the bottom line, where we continue to see a moderating of the rate of growth of affiliation fees relative to the rate of growth in our distribution revenue.

Mike Baird: We continue to feel positive about the direction of those negotiations and certainly feel good about those that we've completed. The one factor I will say to distinguish CW from some of the others is that CW is bringing more content and more exclusive content to our affiliates going forward to the extent that our larger networks are doing the opposite. We expect that to be reflected in those negotiations.

Michael Biard: We continue to feel positive about the direction of those negotiations and certainly feel good about those that we've completed. The one factor I will say to distinguish CW from some of the others is that CW is bringing more content and more exclusive content to our affiliates going forward to the extent that our larger networks are doing the opposite. We expect that to be reflected in those negotiations.

Michael Biard: We continue to feel.

Michael Biard: Positive about the direction.

Michael Biard: Of those negotiations and certainly feel good about those that we've completed.

Michael Biard: The one factor I will I will say to distinguish the CW from some of the others is the CW is bringing more content and more exclusive content to our affiliates going forward to the extent that our larger networks are doing the opposite we expect that will be reflected in those negotiations.

Mike Baird: And then on your left.

Leanne Gliha: And then on your last question about guidance for cash interest, CapEx, and cash taxes, from an interest perspective, I think what we've mentioned to you before is we just basically look at the forward curve for SOFR, and then every quarter we'll just update, I mean, improve our model in that regard. Our interest expense, I'll just tell you, based on just the current forward curve, is expected to be around $440 million for the year.

Leanne Gliha: And then on your last question about guidance for cash interest, CapEx, and cash taxes, from an interest perspective, I think what we've mentioned to you before is we just basically look at the forward curve for SOFR, and then every quarter we'll just update our model in that regard. Our interest expense, I'll just tell you based on just the current forward curve, is expected to be around $440 million for the year. On a CapEx perspective, I think the midpoint of our range that we had provided at the beginning of the year was around $145 million, $140 million, $145 million.

Speaker Change: And then on your last question about guidance for cash interest Capex and.

Leanne Gliha: Cash taxes from an interest perspective, I think what we've we've mentioned to you before is we just basically look at the forward curve for sulfur and then every quarter, we will just update.

Leanne Gliha: <unk>.

Leanne Gliha: Update our model in that regard are our interest expense I'll just tell you based on foreign current forward curve is expected to be around $440 million for the year.

Leanne Gliha: On a CapEx perspective, I think the midpoint of our range that we had provided at the beginning of the year was around $145 million, $140, $145 million. And then from a tax perspective, we are a full cash taxpayer, unfortunately, so we look at our taxes at a 26.5% rate over the course of the year. I think the way to think about it, just to give you a couple of cheat codes, would be about half of our DNA is tax-deductible. You need to add back 25% of the CW losses that are not allocable to us; they're allocable to our partners.

Leanne Gliha: On a capex perspective, I think the midpoint of our our range that we had provided at the beginning of the year was around 140.

Leanne Gliha: $5 million and 140 $145 million and then from a tax perspective.

Leanne Gliha: And then from a tax perspective, we are a full cash taxpayer, unfortunately, so we look at our taxes at a 26.5% rate over the course of the year. I think the way to think about it, just to give you a couple of cheat codes, would be that about half of our DNA is tax-deductible. You need to add back 25% of the CW losses that are not allocable to us. They're allocable to our partners.

Leanne Gliha: We we are a full cash taxpayer unfortunately.

Leanne Gliha: Look at our taxes on a 26, 5% rate over.

Leanne Gliha: Over the course of the year I think the way to think about it just to give you a couple of mics.

Leanne Gliha: T code would be about half of our DNA is tax deductible.

Leanne Gliha: You need to add back 25% of the CW losses that are not.

Leanne Gliha: Allocable to us they are applicable to our partners and then generally we have somewhere in the neighborhood of.

Leanne Gliha: And then generally, we have somewhere in the neighborhood of $30 or so million of additional adjustments that are to the positive on our cash tax. From a timing perspective, and we've said this before, we don't really pay very much tax in the first quarter. It's really just a few states that have to be paid. We then have two tax payments in the second quarter, and then we try to have one in the third and the fourth that are really kind of evenly distributed, the cash tax over that period. But I hope that's helpful.

Leanne Gliha: And then generally, we have somewhere in the neighborhood of $30 or so million of additional adjustments that are to the positive on our cash tax. From a timing perspective, and we've said this before, we don't really pay very much tax in the first quarter; it's really just a few states that have to be paid. We then have two tax payments in the second quarter, and then we try to have one in the third and the fourth that are really kind of evenly distributed, the cash tax on that.

Leanne Gliha: $37 million of an additional adjustment that are to the positive on a cash tax from a timing perspective, and we've said this before.

Leanne Gliha: We don't really pay very much tax in the first quarter. It's really just a few states that have to be paid. We then have two tax payments in the second quarter and then we try to have one in the third and the fourth that are really kind of evenly distributed that tax cash tax over that period.

Leanne Gliha: So hopefully that's helpful.

Speaker Change: Very helpful. Thank you.

Operator: Very helpful. Thank you. Thank you. Our next question is from Jim Goss with Barrington Research. Please proceed with your question.

Operator: Thank you. Our next question is from Jim Goss with Barrington Research. Please proceed with your question. John Kurnos, John Kurnos, John Kurnos, John Kurnos.

Leanne Gliha: Thank you. Our next question is from Jim Goss with Barrington Research. Please proceed with your question.

Jim Goss: All right, thanks. In terms of the CW and the increased sports, I assume the additional content is usually welcomed by the non-owned affiliates, even though they might be giving up some content or some slots that they might have been able to sell themselves. I'm wondering if you can look at the programming fees you're charging as the main way you're getting paid with these affiliations, or if you might also comment on how you split the ad revenues in the, especially in these incremental slots where you're adding Live and PAC-12 and some of the other things. And also, in regard to PAC-12, last time I looked, it was reduced to Washington State and Oregon State. Is that, are they rebuilding the conference, or are those the two teams you're going forward with?

Mike Baird: All right, thanks. In terms of the CW and increased support, I assume the additional content is usually welcomed by the non-owned affiliates even though they might be giving up some content or some slots that they might have been able to sell themselves. I'm wondering if you can look at the programming fees you're charging as the main way you're getting paid with these affiliations or if you might also comment on how you split the ad revenues, especially in these incremental slots where you're adding Live and PAC-12 and some of the other things. And also, in regard to PAC-12, last time I looked, it was reduced to Washington State and Oregon State. Are they rebuilding the conference, or are those the two teams you're going forward with?

Jim Goss: Alright, thanks, and in terms of the CW and the increased sports.

Jim Goss: Soon.

Speaker Change: The additional content is usually welcome by the.

Speaker Change: Non owned affiliates.

Speaker Change: Even though they might be giving up some top.

Jim Goss: And there is some slots that they might have been able to sell themselves. I'm wondering if you can look at the programming fees, you're charging is the main way youre getting paid with these affiliations or appear.

Jim Goss: I might also comment on how you split the AD revenues.

Speaker Change: Especially in these incremental slots, where youre, adding live and Pac 12, and some of the other things and also in regard to Pet club last.

Jim Goss: The time I left it was reduced to Washington State and Oregon State is that are they rebuilding the conferences.

Speaker Change: The two teams you're going forward with.

Michael Biard: I'll take that. Let me start with the easiest question, which is your last one.

Mike Baird: I'll take that. Let me start with the easiest question, which is your last one.

Speaker Change: I'll take that the let me start with the <unk>.

Mike Baird: And yeah, PAC-12 is currently just Washington State and Oregon State. The future of that conference is really up to them. I think there's a lot of options on the table with the movement around college conferences, but I don't have any inside information to offer you on that. In terms of CW and our negotiations with our affiliates, yeah, it's fair to say that the incremental sports content is well-received by all of them.

Speaker Change: <unk> question, which is your last one and yes. The Pac 12 currently is just Washington State and Oregon State.

Michael Biard: And yeah, the PAC-12 is currently just Washington State and Oregon State. The future of that conference is really up to them. I think there are a lot of options on the table with the movement around college conferences, but I don't have any inside information to offer you on that. In terms of CW and our negotiations with our affiliates, yeah, it's fair to say that the incremental sports content is well received by all of them.

Michael Biard: The future of that conferences really up to them I think there is.

Michael Biard: A lot of options on the table with.

Michael Biard: With the movement around college conferences, but.

Michael Biard: I don't have any inside information to offer you on that in terms of.

Michael Biard: CW and.

Michael Biard: Our negotiations with our affiliates, yes, it's fair to say that the incremental sports content is well received by all of them. We've not had any difficulty clearing any additional day parts as we've added.

Michael Biard: We've not had any difficulty clearing any additional dayparts as we've added programming to the weekends for the first time in the last year and a half, and we continue to see a very positive reception for that. In terms of allocation of advertising and affiliation fees, obviously, the revenue coming into the network is a combination of both, both in terms of our national advertising and in terms of the affiliation fees that we generate. So I think I've answered your question, but if I've missed anything, feel free to follow up.

Mike Baird: We've not had any difficulty clearing any additional dayparts as we've added programming to the weekends for the first time in the last year and a half, and we continue to see a very positive reception for that. In terms of allocation of advertising and affiliation fees, obviously, the revenue coming into the network is a combination of both, both in terms of our national advertising and in terms of the affiliation fees that we generate. So I think I've answered your question, but if I've missed anything, feel free to follow up.

Michael Biard: Programming to the weekend is really for the first time for the last year and a half so we continue to see.

Michael Biard: A very positive reception to that in terms of allocation of advertising and.

Michael Biard: Affiliation fees, obviously, the revenue coming into the network is a combination of both both.

Michael Biard: Both in terms of our national advertising and in terms of the affiliation fees that we generate.

Michael Biard: So I think I've answered your question, but if I've missed anything feel free to follow up.

Perry Sook: Okay. Now, how would they do this? I think you've started.

Jim Goss: Okay, no, Craig would be...

Michael Biard: Okay.

Perry Sook: I think it's important to note, Jim, that the bulk of the sports editions haven't aired yet, and Xfinity, Pac-12, the expanded ACC schedule, WWE Next, that's all coming here in the next 60 days, and we're very excited about the fall of the CW. We've been talking about what's coming now for a year, and it's finally about to hit the airwaves.

Perry Sook: I think it's important to note, Jim, that the bulk of the sports editions haven't aired yet. And Xfinity, Pac-12, the expanded ACC schedule, WWE Next, that's all coming here in the next 60 days. And we're very excited about the fall of the CW. We've been talking about what's coming now for a year, and it's finally about to hit the airwaves. And obviously, you know, when affiliates are able to see the proof point of the additional audience, I mean, they were more than willing to ante up over weekend inventory for live sports and to be able to compete in that arena from an advertising perspective, as are we.

Speaker Change: They would be.

Speaker Change: I would note Jim that the bulk of the sports editions have an aired yet and Xfinity Pac 12, the expanded ACC schedule WWE next that's all coming here in the next 60 days and we're very excited about the fall at the CW, we've been talking about what's coming now for a year.

Perry Sook: And it's finally about the hit the airwaves and then obviously.

Perry Sook: And obviously, you know, when affiliates are able to see the proof point of the additional audience, I mean, they were more than willing to ante up over weekend inventory, you know, for live sports, and to be able to compete in that arena from an advertising perspective, as are we. I mean, we had a very good upfront in terms of monetizing this additional inventory, albeit in a tough market, but we're pleased with those results.

Speaker Change: When affiliates are able to see the proof point of the additional audience that they were more than willing to anti over weekend inventory.

Perry Sook: For my sports and to be able to compete in that arena from an advertising perspective as are we I mean, we had a very good upfront in terms of monetizing this additional inventory, albeit in a tough market, but we're pleased with those results, but again I think youll see the impact on our distribution fees.

Perry Sook: I mean, we had a very good upfront in terms of monetizing this additional inventory, albeit in a tough market, but we're pleased with those results. But again, I think you'll see the impact on our distribution fees as the sports become part of the package that our affiliate stations, as well as our O&Os, are able to take to market in discussions with distributors. So it's a virtuous circle going in the right direction, but it's forward-looking, obviously. But we're very excited about finally getting this programming on the air that we've been talking about for the better part of a year.

Perry Sook: But again, I think you'll see the impact on our distribution fees as the sports become part of the package that our affiliate stations, as well as our O&Os, are able to take to market in discussions with distributors. So it's a virtuous circle going in the right direction, but it's forward-looking, obviously. But we're very excited about finally getting this programming on the air that we've been talking about for the better part of a year.

Perry Sook: As the sports become part of the package that our affiliate stations as well as our <unk> are able to take to market and discussions with distributors. So.

Perry Sook: It's a virtuous circle going in the right direction, but it's forward looking obviously, but we're very excited about finally getting this programming on the air that we've been talking about for the better part of the year.

Perry Sook: Ok, great. Last one, I'm wondering about any potential symbiotic interplay between NewsNation and the CW. Will you create some programming on CW from NewsNation, especially in the political sense, that might draw attention to NewsNation and might also benefit CW? And also, can you discuss any ultimate economic value objectives you might have with NewsNation as it continues to gain steam?

Perry Sook: Okay, great. Last one, I'm wondering about any potential symbiotic interplay between NewsNation and the CW. Will you create some programming on CW from NewsNation, especially in the political sense, that might draw attention to NewsNation and might also benefit CW? And also, can you discuss any ultimate economic value objectives you might have with NewsNation as it continues to gain steam?

Speaker Change: Okay great.

Perry Sook: Last one.

Perry Sook: I'm wondering about any potential symbiotic interplay between news nation, and the CW, where you create some programming on CW from news nation, especially in a political sense that might draw attention to news nation and.

Perry Sook: And Mike might also benefit CW and also can you discuss any ultimate economic value objectives, you might.

Perry Sook: With news nation as it continues to gain steam.

Perry Sook: Sure. I mean, I think that, you know, marquee political programming or news programming from NewsNation we have made available to the CW network. The first example of that on a large scale was the Republican presidential debate we did last fall. We made that available to the CW network, and it was cleared on a high percentage of the affiliate base, you know, much to my surprise, but they were hungry for and eager to have live event programming like that on the air.

Perry Sook: Sure.

Speaker Change: I think that marquee political programming our news programming from news nation, we have made available to the CW network.

Perry Sook: The first example of that on a large scale was the Republican.

Perry Sook: Presidential debate, we did last fall, we made that available to the CW network and it was cleared on the high percent of the affiliate base.

Perry Sook: To my surprise, but they were hungry for and eager to have live event programming like that on the year.

Perry Sook: Our Sunday show, The Hill, which Chris Stierwald hosts on Sunday morning, we make available to the CW affiliate base, and it is cleared on a same-day basis on affiliates representing 82% of the country, I think, give or take a percent. So I think as we look toward election coverage, both on, you know, primary, Super Tuesday, looking back, and then a general election, we will make selected programming, you know, and live coverage using our resources available to the CW affiliate body, but to the network at large, and we expect similar uptake to what we've seen in the past.

Speaker Change: Our Sunday show, the Hill, which Chris sidewalk.

Perry Sook: On Sunday morning, we make available to the CW affiliate base and it is cleared on a same day basis on affiliates representing.

Perry Sook: 82% of the country, I think give or give or take a percent. So.

Perry Sook: I think as we look toward election coverage.

Perry Sook: Both on primary Super Tuesday, looking backward and then a general election, we will make selected programming.

Perry Sook: And live coverage using our resources available to the CW affiliate <unk>.

Speaker Change: Bobby but the network.

Perry Sook: Large and we expect similar uptake towards what we've seen in the past I don't think Youll see us launch a daily National news cast on the CW.

Mike Baird: I guess I'm asking why the ad revenue doesn't get booked. Formally booked in September, that's not on your books right now.

Perry Sook: I don't think you'll see us launch a daily national newscast on the CW. I look at that through the lens of our owned and operated stations, which do very well in local news, and I think it would be a real tough sell for them to give up a half hour or an hour of local news to put on a national newscast and have less inventory in it to sell than the local newscast that they have 100% of.

Perry Sook: Look at that through the lens of our owned and operated stations in.

Perry Sook: That do very well in local news and I think it would be a real tough for them to give up a half hour or an hour of time of local news to put on a national newscast and have less inventory to sell than the local news cast that they have.

Mike Baird: I have two more quick questions, guys. One, auto. Can you just quantify how much that was down in the quarter and what your outlook is for the third quarter?

Mike Baird: Yeah, I mean auto was down mid single, mid single digits. We don't project on a by category basis, but you know it is. I'll tell you from a pacing perspective, it's down a little bit more in the third quarter so far than it was in the second.

Mike Baird: Okay, my final question. Thanks for your time here. Can you give me a ballpark, if you would, what percent of your viewers on your television stations are over the air nowadays?

Mike Baird: So, I mean, look, I, you could, there's a variety of different external resources that tell you about that. It's usually you can, it's in the low teens percent of viewership is consuming content over the air. Okay, great. Thanks a lot, guys.

Mike Baird: Okay, great. Thanks a lot, guys. No problem.

Perry Sook: So, you know, we said when we took over the operation and majority ownership of the network, this would be a network owned by broadcasters for broadcasters. And so when we look at it through ultimately our station and our affiliate station's lens, I'm not sure the national newscast would make any sense on a regular day-to-day basis. Mike, do you have anything to add to that?

Perry Sook: So, you know, we said when we took over the operation and majority ownership of the network that this would be a network owned by broadcasters for broadcasters. And so when we look at it through ultimately our station and our affiliate station's lens, I'm not sure that the national newscast would make any sense on a regular day-to-day basis. Mike, do you have anything to add to that?

Perry Sook: 100% up so we said when we took over the operation in majority ownership of the network. This will be a network owned by broadcasters for broadcasters and so when we look at it through ultimately our station in our affiliate stations lens I'm not sure the national newscast would make any sense on a regular daily basis I might give you.

Mike Baird: No, I think that's right. I think you can look at another network out there that has a very successful cable news network and a broadcast network, and they haven't married those two in that fashion for the very reasons that you just articulated, Perry. I will add the only other benefit to the CW affiliates coming from NewsNation is in the case of breaking news, right, where we have had the opportunity, as we did with some of the recent weekend breaking news, to cover that live and offer our CW affiliated stations the opportunity to show live news when viewers might be going elsewhere to look at those breaking events.

Michael Biard: No, I think that's right. I think you can look at another network out there that has a very successful cable news network and a broadcast network, and they haven't married those two in that fashion for the very reasons that you just articulated, Perry. I will add the only other benefit to the CW affiliates coming from NewsNation is in the case of breaking news, right, where we have had the opportunity, as we did with some of the recent weekend breaking news, to cover that live and offer our CW-affiliated stations the opportunity to show live news when viewers might be going elsewhere to look at those breaking events.

Mike: Anything to add to that no I think thats right. I think you can look at it another network out there that has.

Speaker Change: A very successful cable news network and a broadcast network and <unk>.

Michael Biard: Not marry those two in that fashion for the very reasons that you just articulated Perry I will add the only other benefit to the CW affiliates coming from news nation as in the case.

Michael Biard: In the scenario of breaking news right, where we have had the opportunity as we did with some of the recent weekend breaking news to cover that live and offer our CW affiliated stations the opportunity to show.

Michael Biard: News when viewers might be going elsewhere to look at that at those breaking events.

Perry Sook: Okay, it's very helpful to hear your mindset on this. Thanks very much.

Jim Goss: Okay, it's very helpful to hear your mindset on this. Thanks very much.

Speaker Change: Okay very helpful to hear your mindset on this thanks very much.

Operator: Thank you. There are no further questions at this time. I'd like to hand the call back to Perry Sook, CEO, for any closing comments. Thank you very much.

Speaker Change: Thank you there are no further questions at this time I'd like to hand, the call back to Perry Sook CEO for any closing comments.

Perry Sook: Thank you very much, operator. Our strong financial framework combined with the cash generative nature of our business continues to enable Nexstar to deliver strong levels of free cash flow while maintaining our strong balance sheet and continued low leverage. Looking ahead, we will continue to execute against our long-term strategies, taking the necessary actions and making the required investments to shape the future of Nexstar while delivering long-term growth and outsized returns to our shareholders. Thank you everyone for joining us today, and we look forward to speaking with you again in November right after the election when we report on our third quarter results.

Perry Sook: Thank you very much, operator. Our strong financial framework combined with the cash generative nature of our business continues to enable Nexstar to deliver strong levels of pre-cash flow while maintaining our strong balance sheet and continued low leverage. Looking ahead, we will continue to execute against our long-term strategies, taking the necessary actions and making the required investments to shape the future of Nexstar while delivering long-term growth and outsized returns to our shareholders. Thank you everyone for joining us today, and we look forward to speaking with you again in November, right after the election, when we report on our third quarter results.

Perry Sook: Thank you very much operator, our strong financial framework combined with the cash generative nature of our business continues to enable nexstar to deliver strong levels of free cash flow, while maintaining our strong balance sheet and continued low leverage looking ahead, we will continue to execute against our long term strategy is taking the necessary actions.

Perry Sook: And making the required investments to shape the future of Nexstar, while delivering long term growth and outsized returns to our shareholders. Thanks, everyone for joining us today and we look forward to speaking with you again in November right. After the election, when we report on our third quarter results.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.

Mike Baird: Is there a risk here that it could be worse than just down those single digits? What's the court? Yeah, I mean, like a political contingency to expand. Yeah, there could be a trade-off if we if our expectations for politics increase, that could have a further impact on court. But you know, based on our current modeling, which includes the crowd out of every mentioned, and it's down most single digits is what we're pacing out for the third. [inaudible]

Operator: Thank you. Our next question is from Steven Cahall with Wells Fargo. Please proceed with your question.

Q2 2024 Nexstar Media Group Inc Earnings Call

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