Q3 2024 Nexstar Media Group Inc Earnings Call

Over to Joe <unk> Investor Relations. Please go ahead Sir.

Joe: Thank you Sasha and good morning, everyone I'll read the Safe Harbor language, and then we'll get right into the call.

Joe: All statements 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.

Speaker Change: 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.

Speaker Change: For additional details on these risks and uncertainties. Please see Nexstar has annual report on Form 10-K for the year ended December 31, 2023 as filed with the Securities and Exchange Commission and Nexstar subsequent public filings with the SEC.

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

Speaker Change: With that it's now my pleasure to turn the conference over to your host Nexstar founder Chairman and Chief Executive Officer Perry Sook Perry. Please go ahead.

Perry Sook: Thank you Joseph and good morning, everyone. We appreciate you all being with US today with me here on the call as always our Mike Byrd, Our President and Chief operating Officer, and Lee <unk>, Our Chief Financial Officer, I will start with a summary of recent highlights followed by Mike's operations review and <unk> Financial review and then we will open the call.

For additional details on these risks and uncertainties. Please see next door. It's annual report on Form 10-K for the year ended December 31, 2023 as filed with the Securities and Exchange Commission and Nexstar 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.

Speaker Change: For your questions.

Speaker Change: Nexstar delivered another quarter of financial results for the record books, we achieved the highest third quarter total net revenue in the company's history comprised of all time high third quarter distribution and advertising revenue, including record political advertising revenue.

Otherwise.

With that it's now my pleasure to turn the conference over to your host Nexstar founder Chairman and Chief Executive Officer Perry Sook Perry. Please go ahead.

Speaker Change: September quarter, Mark next our third consecutive reporting period of record total net revenue and fourth consecutive reporting period of record distribution revenue.

Thank you Joseph and good morning, everyone. We appreciate you all being with US today with me here on the call as always are my bird, our president and Chief operating Officer, and Lee <unk>, Our Chief Financial Officer, I will start with a summary of recent highlights followed by makes operations review and we and financial review and then we'll open the call.

Speaker Change: Overall, our strong year to date performance yielded $1 $4 billion of adjusted EBITDA, and 79, I'm, sorry, $792 million of adjusted free cash flow.

Speaker Change: We returned 74% of adjusted free cash flow or $590 million to shareholders in the forms of dividends and share repurchases, which which reduced our shares outstanding year to date by six 3%, while also reducing our debt outstanding by $146 million.

Call for your questions.

Nexstar delivered another quarter of financial results for the record books, we achieved the highest third quarter total net revenue in the company's history comprised of all time high third quarter distribution and advertising revenue, including record political advertising revenue.

Speaker Change: Before my quarterly commentary I wanted to spend a moment highlighting the benefits not only to the broadcast TV industry, but of our place as the largest local television broadcaster in America from.

September quarter, Mark next our third consecutive reporting period, a record total net revenue and fourth consecutive reporting period, a record distribution revenue.

Speaker Change: From the beginning we've been clear in our view that broadcast is the bellwether of the linear TV ecosystem and the foundational element of every pay TV service as well as every political campaign.

Overall, our strong year to date performance yielded $1 $4 billion of adjusted EBITDA, and 79, I'm, sorry, $792 million of adjusted free cash flow.

We returned 74% of adjusted free cash flow or $590 million to shareholders in the forms of dividends and share repurchases, which visit which reduced our shares outstanding year to date by six 3%, while also reducing our debt outstanding by 146 million.

Speaker Change: For almost three decades now Nexstar has consistently created tremendous value for our shareholders because of the enduring value of our scaled assets and our superior business model or.

Speaker Change: Our diversified media platform produces and distributes the programming consumers that want consumers want to watch, which is led by sports and news along with our partners. We have unparalleled footprint of 200 broadcast stations comprised of Topneck network affiliates that consistently generate the highest network ratings and total day ratings in there.

Before my quarterly commentary I wanted to spend a moment highlighting the benefits not only to the broadcast TV industry right of our place as the largest local television broadcaster in America.

From the beginning we've been clear in our view that broadcast is the bellwether of the linear TV ecosystem and the foundational element of every pay TV service as well as every political campaign.

Speaker Change: Marketplaces.

Speaker Change: Together, we command a number one or number two position in local news and 80% of our markets. We also own the CW America's fifth major broadcast network and news nation, Our National News network, providing news for all of America and all Americans.

And for almost three decades now Nexstar has consistently created tremendous value for our shareholders because of the enduring value of our scaled assets and our superior business model. Our diversified media platform produces distributes the programming consumers that want consumers want to watch, which is led by sports and news along with.

Speaker Change: <unk> assets work together to support each other and deliver premium programming for the consumer while also delivering growing value for our shareholders.

Speaker Change: We achieved this by maximizing distribution and advertising revenue, while maintaining strict cost controls to drive strong capital returns a record breaking top line financial performance in the current environment, including record breaking distribution revenue further validates the power and sustainability of our highly profitable business model.

Our partners, we have unparalleled footprint out 200 broadcast stations comprised of top network affiliates that consistently generate the highest network ratings and total day ratings in their marketplaces.

Together, we command a number one or number two position in local news and 80% of our markets. We also own the CW America's fifth major broadcast network and news nation, Our National News network, providing news for all of America and all Americans next.

Together, we command the number one or number two position of local news in 80% of our markets. We also own the CW, America's fifth major broadcast network, and NewsNation, our national news network providing news for all America and all Americans.

Speaker Change: There's a reason why companies like Nexstar and Fox are not experiencing the same challenges facing many larger media companies with broad exposure to cable entertainment networks. We both on the stream streamlined portfolio of linear TV and that's including a broadcast network cable news network and a portfolio of broadcast television stations.

<unk> assets work together to support each other and deliver premium programming for the consumer while also delivering growing value for our shareholders.

Nexstar's assets work together to support each other and deliver premium programming for the consumer, while also delivering growing value for our shareholders.

Speaker Change: With our programming strategy anchored by news and sports.

We achieved this by maximizing distribution and advertising revenue, while maintaining strict cost controls to drive strong capital returns a record breaking topline financial performance in the current environment, including record breaking distribution revenue further validates the power and sustainability of our highly profitable business model.

We achieved this by maximizing distribution and advertising revenue, while maintaining strict cost controls to drive strong capital returns.

Speaker Change: Without the long tail of underperforming cable network assets both of our businesses are delivering strong performances in the current environment.

Speaker Change: We anticipate the value of broadcast networks and broadcast stations will only continue to climb bolstered by their value to sports teams and leagues NFL and now the NBA are requiring that broadcast networks and stations be an integral part of their distribution because of the viewership uplift audience and community engagement.

A record-breaking top-line financial performance in the current environment, including record-breaking distribution revenue, further validates the power and sustainability of our highly profitable business model.

There's a reason why companies like Nexstar and Fox are not experiencing the same challenges facing many larger media companies with broad exposure to cable entertainment networks, we both on the stream streamlined portfolio with linear TV assets, including our broadcast network, a cable news network and a portfolio of broadcast television station.

There's a reason why companies like Nexstar and Fox are not experiencing the same challenges facing many larger media companies with broad exposure to cable entertainment networks.

Speaker Change: And the increased value it brings to the franchises we.

We both own a streamlined portfolio of linear television assets, including a broadcast network, a cable news network, and a portfolio of broadcast TV stations.

Speaker Change: This firsthand based on our negotiations for sports rights as well as many other proof points in the marketplace earlier. This month ESPN added six more Monday night football games to be simulcast on a b C and their affiliates in line with the prior season, we believe Disney did this because last season, there ESPN simulcast on a B C.

<unk> with the programming strategy anchored by news and sports without the long tail of underperforming cable network assets both of our businesses are delivering strong performances in the current environment.

with a programming strategy anchored by news and sports. Without the long tail of underperforming cable network assets, both of our businesses are delivering strong performances in the current environment.

We anticipate the value of broadcast networks and broadcast stations will only continue to climb bolstered by their value to sports teams and leagues NFL and now the NBA are requiring that broadcast networks and stations be an integral part of their distribution because of the viewership uplift audience and community engagement.

We anticipate the value of broadcast networks and broadcast stations will only continue to climb, bolstered by their value to sports teams and leagues.

Speaker Change: Helped to fuel a 29% lift in Monday night football ratings. Additionally for the second time in three years, all five NBA Christmas day games will be signing a simulcast on ABC and their stations.

The NFL and now the NBA are requiring that broadcast networks and stations be an integral part of their distribution because of the viewership uplift, audience and community engagement, and the increased value it brings to the franchises.

Speaker Change: Further driving homeless point, the recent network shift by the Indy car series happened because of the new deal on broadcast television gave the series. The most exposure CEO Mark miles said and I quote we did not do the deal which would have afforded us the greatest bright speed.

And the increased value it brings to the franchises.

We know this firsthand based on our negotiations for sports rights as well as many other proof points in the marketplace earlier. This month ESPN added six more Monday night football games to be simulcast on a b C and their affiliates in line with the prior season, we believe Disney did this because last season, there ESPN simulcast on a B C.

Speaker Change: This is the deal that made economic sense, but more so was far and away the greatest reach and that you could think about as our willingness to invest by taking less for the growth of the sport through greater reach.

He helped to fuel a 29% lift in Monday night football ratings. Additionally for the second time in three years, all five M. B, a Christmas day games will be simulcast on a b C and their stations.

Speaker Change: That and demonstrating the power of our broadcast network. The CW develop a deliberate record audiences for the debut of the NASCAR Xfinity series as well as WWE NXT.

Further driving homeless point, the recent network shift by the Indy car series happened because of the new deal on broadcast television gave the series. The most exposure CEO Mark miles said and I quote we did not do the deal which would have afforded us the greatest bright spot.

Speaker Change: Ask our Xfinity series race from Bristol Motor Speedway on September 30th averaged 906000 viewers, which were the highest ratings for the series since July of 2024 and on October 1st WWE next drew 895000 viewers to the CW and increase of over 44%.

This is the deal that made economic sense, but more so was far and away the greatest reach and that you could think about as our willingness to invest by taking less for the growth of the sport through greater reach.

Speaker Change: Sent from the prior week's episode on cable and.

Speaker Change: And on Saturday October five 2024, when the CW had NASCAR Xfinity series racing ACC football and Pac 12 football, we saw $4 7 million viewers tuned into the CW and a day part on the CW, which had never existed before our ownership.

To that end demonstrating the power of our broadcast network. The CW develop a deliberate a record audiences for the debut of the NASCAR Xfinity series as well as WWE NXT the.

Speaker Change: Top it all off we are also out delivering the competition on October the eighth WWE next beat its closest direct competitor EW and total viewers by 166% and also beat Cbs's Matlock and boxes programming in the hour in the 18 to 49 demographic.

The NASCAR Xfinity series race from Bristol Motor Speedway on September 30th averaged 900.

6000 viewers, which were the highest ratings for the series since July of 2024 and on October 1st WWE next drew 895000 viewers to the CW and increase of over 44% from the prior week's episode on cable and on Saturday October five 2024, when they see.

Speaker Change: Since we acquired the CW in the fourth quarter of 2022, we have transformed the profile of the network. We've increased the number of hours of total programming by over 40% and now 46% of the programming hours. The CW will deliver in 2025 will be sports and sports related programming, including NASCAR.

Speaker Change: GW had NASCAR Xfinity series racing ACC football and Pac 12 football, we saw $4 7 million viewers tuned into the CW and a day part on the CW, which it never existed before our ownership.

Speaker Change: WWE, ACC football and basketball and Pac 12 football and more.

Speaker Change: To top it all off we are also delivering the competition on October the eighth WWE next beat its closest direct competitor EW and total viewers by 166% and also beats Cbs's Matlock and Fox news programming in the hour in the 18 to 49 demographic.

Speaker Change: We are accomplishing this with lower cost for programming that will generate higher viewership than the original the network previously aired as proof of this in the third quarter, we reduced the CW operating losses by $36 million year over year, and now by $119 million year to date over achieving our previously stated goal of improving the <unk>.

Speaker Change: Since we acquired the CW in the fourth quarter of 2022, we have transformed the profile of the network. We've increased the number of hours of total programming by over 40% and now have 46% of the programming hours. The CW will deliver in 2025 will be sports and sports related programming, including NASCAR.

Speaker Change: Operating loss position by over $100 million this year.

Speaker Change: As we said previously the station side of our business continues to benefit from the ownership of the CW broadcast network as well, we recently announced that five additional nexstar stations in Augusta Monro Wichita Falls Terre Haute and Utica became CW network affiliates, and we just announced the acquisition of an independent station in Cleveland, Ohio.

Speaker Change: Our WWE ACC football and basketball and Pac 12 football and more rare.

Speaker Change: We are accomplishing this with lower costs for programming that will generate higher viewership than the original network previously aired as proof of this in the third quarter, we reduced the CW operating losses by $36 million year over year, and now by $119 million year to date over achieving our previously stated goal of improving the <unk>.

Speaker Change: Which will become the market CW affiliate in Scepter I'm, sorry September of 2025, once the transaction closes.

Speaker Change: The additions of the CW affiliates to our stations benefit us by generating operating profit on our station side of the ledger and to date, excluding Cleveland and the acquisition. We made last year in San Diego, which will also become a CW affiliate in the future. We have moved 17 CW affiliations to our station group.

Speaker Change: Operating loss position by over $100 million this year.

Speaker Change: As we said previously the station side of our business continues to benefit from the ownership of the CW broadcast network as well, we recently announced that five additional nexstar stations in Augusta Monro Wichita Falls Terre Haute and Utica became CW network affiliates, and we just announced the acquisition of an independent station in Cleveland, Ohio, which.

Speaker Change: Bringing the number of company and partner owned CWC 54, covering approximately 46% of all U S television households.

Speaker Change: The biggest one station footprint of all of the Big five networks.

Speaker Change: We'll become the market's CW affiliate in Scepter, So I'm sorry September of 2025 once the transaction closes.

Speaker Change: Turning now to news nation, and political revenue two nights ago, our four year old cable network distinguished itself on America's biggest stage in conjunction with our partners at decision desk HQ. We were the first news outlet to call the results of the presidential election.

Speaker Change: The additions of the CW affiliates to our stations benefit us by generating operating profit on our station side of the ledger and to date, excluding Cleveland and the acquisition. We made last year in San Diego, which will also become a CW affiliate in the future. We have moved 17 CW affiliations to our station group.

Speaker Change: With DDA Skus precinct level voting data not only where we the first to call. Many states and statewide races substantially ahead of the timeline of the competition, but we also called east each rage, a race with a 100% accuracy.

Speaker Change: Bringing the number of company and partner owned Cw's at 54, covering approximately 46% of all U S television households.

Speaker Change: Our exclusive probability meter gave indications of trends in races in states, even before Didi HQ was prepared prepared to make the official call. Our coverage was balanced our conversation was both smart and respectful and insightful and has been <unk>.

Speaker Change: The biggest one station footprint of all of the Big five networks.

Speaker Change: Turning now to news nation, and political revenue two nights ago, our four year old cable network distinguished itself on America's biggest stage in conjunction with our partners that decision desk HQ. We were the first news outlet to call the results of the presidential election.

Speaker Change: And news nation has aided with resources that no. Other network has first news nation benefits from the work of our local news organizations and 116 markets across the country, which collectively produced a record 75 debates in town halls, and 2024 second news nation works in tandem with the hill, which we own.

Speaker Change: With D D H T V's precinct level voting data not only where we the first to call. Many states and statewide races substantially ahead of the timeline of the competition, but we also called east each rage, a race with a 100% accuracy.

Speaker Change: The number one new source in terms of users for inside the beltway coverage of D. C. This is why I believe that in conjunction with these resources and partners like decision desk HQ News nation is the National News network of the future.

Speaker Change: Our exclusive probability meter gave indications of trends in races in states, even before D. D. HQ was prepared prepared to make the official call. Our coverage was balanced our conversation was both smart and respectful and insightful and has been so sense.

Speaker Change: To say I'm incredibly proud of the work we continue to do and have the audience growth that we continue to demonstrate.

Speaker Change: And news nation has aided with resources that no. Other network has first news nation benefits from the work of our local news organizations and 116 markets across the country, which collectively produced a record 75 debates in town halls, and 2024 second news nation works in tandem with the hill, which we own.

Speaker Change: With the election behind us, we have pretty clear visibility into the 2020 for political advertising revenue picture as of election day, we booked political advertising revenue of $491 million year to date, a record presidential election year, so far versus the $479 million, we booked through election day in 2020 once.

Speaker Change: The number one new stores in terms of users for inside the beltway coverage of D. C. This is why I believe that in conjunction with these resources and partners like decision desk HQ News nation as the National News network of the future suffice it to say I'm incredibly proud of the work we continue to do and if the audience growth that we continue.

Speaker Change: Again, local TV received by far the largest amount of political spending and it remains the medium of choice for candidates and interest groups to reach local voters at scale.

Speaker Change: As we move into the period of government to be led by the Republicans in the White House and the Senate and likely the house, we will continue to work to push forward industry deregulation.

Speaker Change: To demonstrate.

Speaker Change: With the election behind us, we have pretty clear visibility into the 'twenty 'twenty four political advertising revenue picture as of election day, we booked political advertising revenue of $491 million year to date, a record presidential election year, so far versus the $479 million, we booked through election day in 2020 once.

Speaker Change: As evidenced that the antiquated ownership cap supply to broadcasters do not reflect the reality of today's competitive media environment.

Speaker Change: We believe we believe that there is value to be created for our shareholders through further consolidation, while driving true and new benefits to the American people, who want them deserve fact based unbiased local news reported on by the over 5500 journalists that we employ.

Speaker Change: Again, local TV received by far the largest amount of political spending and it remains the medium of choice for candidates and interest groups to reach local voters at scale.

Speaker Change: More on this from US as we progress in summary, Nextera is consistent strong results and free cash flow generation remains one of our most powerful differentiators from our peers and larger five large diversified media companies and it will enable us to achieve strong growth in shareholder results overcoming market headwinds with all.

Speaker Change: As we move into the period of government to be led by the Republicans in the White House and the Senate and likely the house, we will continue to work to push forward industry deregulation.

Speaker Change: It's evident that the antiquated ownership cap supply to broadcasters do not reflect the reality of today's competitive media environment.

Speaker Change: That said now let me turn the call over to Mike Baird Mike.

Mike Baird: Terry and good morning, everyone.

Mike Baird: Terry referenced we delivered record third quarter net revenue of $1 $37 billion compared to $1 3 billion in the prior year quarter.

Speaker Change: Next Ars 27% increase in net revenue was primarily due to growth in distribution revenue and advertising revenue driven by political.

Speaker Change: Our all time high third quarter distribution revenue grew 22% year over year to $719 million.

Speaker Change: Distribution revenue growth benefited from the comparison with the third quarter of 2023 that included a period when Nexstar stations were dark with one in DTD.

Speaker Change: Growth also reflects the benefit of favorable distribution contract renewals in 2023 annual rate escalators.

Speaker Change: Growth in <unk> subscribers. The addition of CW affiliation on certain of our stations and the return of partner stations on one and the PD in January.

Speaker Change: Which together more than offset in the PD subscriber attrition.

Speaker Change: All in on an apples to apples basis distribution revenue grew mid single digits and net Retrans grew high single digits.

Speaker Change: Excluding the removal of partner stations from certain Mvpds are 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 independent stations on Youtube TV and other <unk>.

Speaker Change: The addition of new CW affiliations at Nexstar stations and recent station acquisitions.

Speaker Change: Taking a closer look at distribution.

Speaker Change: The last renewal cycle, we made notable progress completing distribution and network affiliation agreements on favorable terms, while expanding distribution of our nexstar owned national services, including the CW and news nation.

Speaker Change: As Terry described in more detail. We believe this performance is testament to the value and power of our programming and scale.

Speaker Change: Yeah.

Speaker Change: And July Nexstar, and our partner stations reached agreement with Cvs to renew our affiliations in 42 markets as part of that negotiation to Paramount owned independent stations in Miami and Detroit, Both top 20 markets became affiliates of the CW network on September one.

Speaker Change: And in August we renewed the CW affiliation agreements with 38 Grey media owned television stations.

Speaker Change: Looking out we remain optimistic that we will see further declines in subscriber attrition in.

Speaker Change: In this past quarter, Comcast reported a slowing of subscriber attrition charter also made some positive comments on their earnings call about the success of their new programming bundle.

Speaker Change: When they quote expect to have a pretty significant impact on acquisition and retention certainly for video closed club and that they closed already see a significant uplift in the video sell in close quote with their new video pricing and packaging of several DTC services with their linear video product.

Speaker Change: And third party research is also picking up on this trend for example, SNL Kagan published a report in October that projected a slowdown in the rate of pay TV attrition beginning in 2025 by about 2% to four 6% with a further meaningful step down in 2026 to two 8%. This is consistent with our pre.

Speaker Change: <unk> stated thesis that we would see the rate of attrition normalize when pay TV subscribers, who are not loyal sports and news viewers had exited the ecosystem.

Speaker Change: Indeed proprietary data from our media consultant Altman alone shows the composition of subscribers in the pay TV ecosystem that are not interested in either sports or news is down to 4% in 2023 from 14% in 2019 with subscribers who are interested in both sports and news increasing in both the quantum.

Speaker Change: And relative share without share rising to 68%.

Speaker Change: Pay TV ecosystem.

Speaker Change: Additionally, we continue to see an increasing number of DTC products packaged with pay TV bundles as the industry works towards coalescing around economic models that make more sense financially across the industry with the most recent example, being the Disney Directv and charter NBC new agreements.

Speaker Change: In addition, the power of the broadcast network model for sports programming and other content owners continues to drive maximum reach viewership and engagement.

Speaker Change: Broadcast network programming continues to be the most watched programming in the pay TV ecosystem, yet it remains relatively under compensated by distributors.

Speaker Change: <unk> Entertainment cable networks, especially those deep valued by the migration of their programming to affiliated streaming services are suffering from declining viewership that inevitably is being reflected in their renewals with distributors.

Speaker Change: Broadcast stations on the other hand are expected to continue to thrive as the number and cost of cable networks in the bundle becomes even more rationalized. We expect more dollars will be freed by mvpds and <unk> to allocate towards critical broadcast news and sports programming that continue to perform across the landscape.

Speaker Change: Our September Moffett, Nathan and research report on cord cutting supports this thesis as they protect as they project that retrans rates will continue to grow in the mid single digit range in 2025, while cable affiliation fees will decline by a similar percentage.

Speaker Change: A moderation in pay TV subscriber attrition and continued growth in retransmission rates together with our superior broadcast network programming and scale should benefit the continued growth of our distribution revenue.

Speaker Change: It is evident from next Ars record third quarter and year to date distribution revenue that our distribution partners and their customers continue to value the highest rated broadcast and the strong fact based cable news network programming we provide.

Speaker Change: Turning to advertising.

Speaker Change: Third quarter advertising revenue increased 22, 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.

Speaker Change: Nonpolitical advertising declined four 5% year over year in the third quarter, just slightly favorable to our $4 seven decline in the second quarter.

Speaker Change: We were affected in the quarter by ongoing advertising market softness and political displacement that were more impactful than anticipated.

Speaker Change: The Olympics, partially offset those factors, reducing the year over year rate of decline for nonpolitical advertising by 3%.

Speaker Change: Looking ahead to the fourth quarter Nonpolitical advertising is pacing down on a year over year basis at a low double digit percentage rate and part due to the significant amount of fourth quarter political advertising as well as the continued impact of the challenging advertising market.

Speaker Change: Turning to political third quarter political advertising of $154 million increased by $135 million year over year and rose 16% over the comparable 2020 period, a record third quarter achievement.

Speaker Change: And as Perry mentioned as of election day, Nexstar had record political advertising revenue on the books versus 2020.

Speaker Change: Touching on the CW for a moment as Terry outlined we're pleased with the arrival of our new programming strategy and in particular, the success of CW sports phase.

Speaker Change: Phase one of our strategy has been successful and we have reduced programming costs by over half from the $560 million in 2000 $22 million to $270 million expected in 2024. This despite expanding network day parts and programming hours. The next phase focuses on monetizing that success through advertising and distribution.

Speaker Change: In fact more than two thirds of the CW affiliations are up for renewal in 2025 positioning us well for a strong 2026.

Speaker Change: And finally moving to our operations, we are acting to further streamline and simplify the entire organization, which will accelerate innovation across the company and reduce operating expenses.

Speaker Change: <unk> will enable <unk> to focus on initiatives that more directly impact our viewers partners and customers as we pursue priorities that represent our best long term opportunities.

Speaker Change: In summary.

Speaker Change: Our results evidenced the continued strong performance across our highest margin revenue streams with more opportunities to drive growth still ahead of us.

Speaker Change: We have experienced accomplished teams in each of our businesses have continued to execute well against our plan delivering strong revenues adjusted EBITDA adjusted free cash flow and shareholder returns and with that it's my pleasure to turn the call over to Leann for the remainder of the financial review.

Leann: 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.

Leann: Together second quarter direct operating and SG&A expenses, excluding depreciation and amortization and corporate expenses increased by $22 million or 3%. The increase was primarily due to increased programming costs due to the variable fees related to the period of time, we were dark with Directv last year and the expansion of news programming.

Leann: Q3, 2024, total corporate expense was $53 million, including noncash compensation expense of $19 million compared to $52 million, including noncash compensation expense of $16 million in the third quarter of 2023, the increase of $1 million is primarily due to increase in noncash compensation expense.

Leann: Offset in part by reduced legal fees.

Leann: Q3, 2020 for depreciation and amortization was $190 million versus $220 million in the prior year quarter, a decline of $30 million of these amounts included in our definition of adjusted EBITDA is $70 million related to the amortization of broadcast rights for Q3, 2024 compared to $98 million for.

Leann: Q3, 2023, a reduction of amortization of broadcast rights by $28 million was primarily due to lower programming costs at the CW by $26 million as we replace more expensive programming with less expensive programming.

Leann: Q3, 2020 for income from equity method investments, which primarily reflects our 31% ownership in TV food network declined by $7 million in the quarter or 29% primarily related to lower advertising revenue.

Leann: Putting it all together on a consolidated basis third quarter, adjusted EBITDA with $510 million, representing a 37, 3% margin an increase of $231 million from third quarter 2023, adjusted EBITDA of $279 million. This improvement is due primarily to election year political revenue and the impact of our dark.

Speaker Change: The reduction of amortization to broadcast rights by $28 million was primarily due to lower programming costs at the CW by $26 million as we replaced more expensive programming with less expensive programming.

Speaker Change: With Mvpds for 76 days during last year's third quarter.

Leann: Moving to free cash flow and adjusted free cash flow. We now reconciled these measures measures to cash from operations as opposed to net income as we previously provided and will continue to call out a number of the key items in this reconciliation third quarter Capex was $29 million.

Speaker Change: Q3 2024 Income from Equity Method Investments, which primarily reflects our 31% ownership in TV Food Network, declined by $7 million in the quarter, or 29%, primarily related to lower advertising revenue.

Leann: Compared to $36 million in the third quarter of last year, a decrease of $7 million due primarily to reduced capital expenditure plan for the year and timing of expenditures.

Speaker Change: Putting it all together, on a consolidated basis, third quarter adjusted EBITDA was $510 million, representing a 37.3% margin, an increase of $231 million from third quarter 2023 adjusted EBITDA of $279 million.

Leann: Third quarter net interest expense was stable at $113 million for both the third quarter of 2024 and 2023. This compares on a cash basis to $110 million in Q3 24 versus $111 million in Q3 23.

Speaker Change: This improvement is due primarily to election year political revenue and the impact of our dark period with an MVPD for 76 days during last year's third quarter.

Leann: Third quarter operating cash taxes were $10 million compared to $21 million in 2023, and we changed our method for federal tax payments to the annualized Asian method. This method will enable us to defer about $45 million of tax from 2024 into the second quarter of 2025 and had the impact of reducing estimated tax by about 54.

Speaker Change: Moving to free cash flow and adjusted free cash flow. We now reconcile these measures to cash from operations as opposed to net income as we previously provided. I will continue to call out a number of the key items in this reconciliation.

Speaker Change: Third quarter CapEx was $29 million compared to $36 million in the third quarter of last year, a decrease of $7 million

Leann: In the quarter, we used this excess availability to repay term lumpy next year when we pay the tax we can if needed we borrow the amount under our revolving credit facility for 100 basis points less than the cost of the debt we repaid our.

Speaker Change: do primarily to a reduced capital expenditure plan for the year and timing of expenditures. Third quarter net interest expense was stable at $113 million for both the third quarter of 2024 and 2023.

Leann: Cash taxes for the fourth quarter are estimated to be about $75 million.

Speaker Change: This compares on a cash basis to $110 million in Q3'24 versus $111 million in Q3'23.

Leann: Payments for capitalized software obligations and pension credit net of proceeds from disposal of assets and insurance recoveries were $7 million versus $11 million last year.

Speaker Change: Third quarter operating cash taxes were $10 million compared to $21 million in 2023, as we changed our method for federal tax payments to the annualization method.

Leann: Cash contributions from our partners and the CW were zero in the quarter as we made no capital calls versus $11 million in Q3 dollars 23.

Speaker Change: This method will enable us to defer about $45 million of tax from 2024 into the second quarter of 2025 and have the impact of reducing estimated tax by about $54 million in the quarter.

Leann: While the difference between CW programming amortization costs in Q3, 2024, and cash payments with only $2 million that number is expected to grow to $10 million. In Q4 is there'll be some early spend related to 2025 programming impacting the period.

Speaker Change: In the quarter, we used this excess availability to repay term lumpy next year when we pay the tax we can if needed we borrow the amount under our revolving credit facility for 100 basis points less than the cost of the debt we repaid our.

Speaker Change: We use this excess availability to repay Term Loan B. Next year when we pay the tax, we can, if needed, re-borrow the amount under our revolving credit facility for 100 basis points less than the cost of the debt we repaid.

Leann: Putting this all together consolidated third quarter 2024, adjusted free cash flow was $327 million as compared to $81 million last year together.

Speaker Change: Our cash taxes for the fourth quarter are estimated to be about $75 million.

Speaker Change: Our cash taxes for the fourth quarter are estimated to be about $75 million.

Speaker Change: Payments for capitalized software obligations and pension credit net of proceeds from disposal of assets and insurance recoveries were $7 million versus $11 million last year.

Leann: Together with the cash from operations generated in the quarter and cash on hand, we returned $233 million to shareholders comprised of $55 million in dividend and the repurchase of $178 million of stock at an average price of $167 16 per share reducing shares outstanding net of equity vesting by $3.

Speaker Change: Payments for capitalized software obligations and pension credits, net of proceeds from disposal of assets and insurance recoveries were $7 million versus $11 million last year.

Speaker Change: Cash contributions from our partners and the CW were zero in the quarter as he made no capital calls versus $11 million in Q3 23.

Speaker Change: Cash contributions from our partners in the CW were zero in the quarter as we made no capital calls versus $11 million in Q3'23.

Speaker Change: Well the difference between CW programming amortization costs in Q3, 2024, and cash payments with only $2 million that number is expected to grow to $10 million. In Q4 is there'll be some early spend related to 2025 programming impacting the period.

Speaker Change: While the difference between CW programming amortization costs in Q3 2024 and cash payments was only $2 million, that number is expected to grow to $10 million in Q4 as there will be some early spend related to 2025 programming impacting the period.

Leann: 1%.

Leann: Nexstar has outstanding debt at September 32024 was $6 7 billion a reduction of $85 million for the quarter as we made quarterly amortization payments of $31 million.

Speaker Change: Putting this all together consolidated third quarter 2024, adjusted free cash flow was $327 million as compared to $81 million last year together.

Leann: And optionally repaid $54 million on our term loan b as I mentioned with excess cash from the deferral of 2020 for income tax into 'twenty five.

Speaker Change: And putting this all together, consolidated third quarter 2024 adjusted free cash flow was $327 million as compared to $81 million last year.

Speaker Change: Together with the cash from operations generated in the quarter and cash on hand, we returned $233 million to shareholders comprised of $55 million in dividend and the repurchase of $178 million of stock at an average price of $167 16 per share reducing shares outstanding net of equity vesting by $3.

Leann: As a reminder, we plan to make our repurchases more consistent between on an even year and we plan to use a portion of our fourth quarter free cash flow to optionally repay some additional debt.

Leann: Our cash balance at quarter end was $181 million, including $22 million of cash related to the CW <unk>.

Leann: Cause we designated the CW is an unrestricted subsidiary the losses associated with the CW are not accounted for in our calculation of leverage for purposes of our credit agreements as such our net first lien covenant ratio for Nexstar, excluding CW labs at as of.

Speaker Change: 1%.

Speaker Change: Nexstar has outstanding debt at September 32024 was $6 7 billion a reduction of $85 million for the quarter as we made quarterly amortization payments of $31 million and optionally repaid $54 million on our term loan b as I mentioned with excess cash from the deferral of 2020 for income tax into 'twenty five.

Leann: The LTM period ended September 32024, it was 191 times, which is well below our first lien only covenant of four five times, our total net leverage for Nexstar. Excluding CW was three six times at quarter end.

Speaker Change: As a reminder, we plan to make our repurchases more consistent between at an even year and we plan to use a portion of our fourth quarter free cash flow to optionally repay some additional debt.

Leann: As is typical in political years, we expect leverage which we calculate on an LTM basis versus a key your average default during 2024 as adjusted EBITDA growth with election year political advertising.

Speaker Change: Our cash balance at quarter end was $181 million, including $22 million of cash related to the CW.

Speaker Change: Cause we designated the CW is an unrestricted subsidiary the losses associated with the 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 lab at as of.

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

Leann: Before I finish I want to note that similar to all the other broadcasters in the sector. We reached agreement with the SEC regarding the earnings release presentation of our non-GAAP measures of adjusted EBITDA free cash flow and adjusted free cash flow I would refer you to our Q3 earnings release, which describes the new definitions and reconciliations to the closest comparable GAAP financial measure.

Speaker Change: The LTM period ended September 32024, it was 191 times, which is well below our first lien only covenant of four to five times, our total net leverage for Nexstar. Excluding CW was three six times at quarter end.

Leann: We're also providing supplemental information regarding these changes on our web site next our dot PV. None of these changes have any impact on the calculation of our leverage pursuant to our credit agreement.

Speaker Change: As is typical in political years, we expect leverage which we calculate on an LTM basis versus the key your average default during 2024 as adjusted EBITDA growth of election year political advertising.

Leann: The primary impact of these changes on adjusted EBITDA is that we are now only using adjusted EBITDA as a performance measure and are no longer using adjusted EBITDA as a proxy for cash flow as a result, we are now including the pro rata share of our net income in the TV food network partnership and our definition of adjusted EBITDA in lieu of ordinary course cash does.

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

Speaker Change: Before I finish I want to note that similar to all the other broadcasters in the sector. We reached agreement with the SEC regarding the earnings release presentation of our non-GAAP measures of adjusted EBITDA free cash flow and adjusted free cash flow I would refer you to our Q3 earnings release, which describes the new definitions and reconciliations to the closest comparable GAAP financial measure.

Leann: Dubuque, we receive from them when we receive them.

Leann: This is the impact of more evenly spreading out that income across the four quarters instead of concentrating it in Q1, when we received the prior year distribution and matching up current year net income with our current year. Adjusted EBITDA. In addition, all programming expenses will be reflected in our definition using amortization rather than actual cash.

Speaker Change: We're also providing supplemental information regarding these changes on our web site next startup T. D. None of these changes have any impact on the calculation of our leverage pursuant to our credit agreement.

Speaker Change: The primary impact of these changes on adjusted EBITDA is that we are now only using adjusted EBITDA as a performance measure and are no longer using adjusted EBITDA as a proxy for cash flow as a result, we are now including the pro rata share of our net income in the TV food network partnership and our definition of adjusted EBITDA in lieu of ordinary course cash.

Leann: Payment.

Leann: The primary impact of these changes on adjusted free cash flow is that we are now using adjusted free cash flow as a liquidity metric rather than a performance metric and are reflecting the cash payments related to the CW programming versus the amortization of these programming payments, which matched up with revenue generation and.

Speaker Change: Distributions, we receive from them when we receive them.

Leann: And including all distributions from TV food network, even though is related to changes in their accounts receivable program and our definition for a more detail as I mentioned, while these changes please refer to the disclosures in our earnings release and the materials on our website.

Speaker Change: The impact of more evenly spreading out that income across the four quarters instead of concentrating it in Q1, when we received the prior year distribution and matching up current year net income with our current year. Adjusted EBITDA. In addition, all programming expenses will be reflected in our definition using amortization rather than actual cash paid.

Speaker Change: With that I'll open up the call for questions. Operator can you go to the first question.

Speaker Change: Thank you we will be conducting a question and answer session. If you would like to ask a question. Please press.

Speaker Change: <unk>.

Speaker Change: The primary impact of these changes.

Speaker Change: Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.

Speaker Change: One moment please poll for questions.

Speaker Change: The first question is from Dan <unk> from benchmark. Please go ahead.

Speaker Change: Great. Thanks.

Speaker Change: Quick ones here Perry just how likely do you think regulatory changes and how does that affect your capital allocation plans given the change in administration.

Speaker Change: And then on news nation was a good watch on linear by the way on election Night do you think news nation benefits from some of the headwinds swirling from advertisers worried about brand safety and then lastly, Mike and just on the CW and the math suggests you are getting pretty close to profitability here. So just love to get an update on.

Mike: The path going forward now.

Speaker Change: Okay. That's a lot let me start with the deregulation.

Speaker Change: Basically the number one legislative priority of Nexstar, and our trade Association <unk> NAV.

Mike: Is the deregulation of ownership at both the national and the local level.

Mike: When you step back and look at it our industry's real competition comes from Big Tech Big Tech companies, who have unfettered access to every screen in America from phones desktops to the TV in the living room, yet our ability to compete with those behemoths.

Mike: Stymied by regulations that were last updated in 2004 to preserve local journalism. This industry need strong companies, who can compete on a level playing field for both viewers and advertisers on every screen in America not just some of them and the time is now to seek this reform and Nexstar has once again prepare.

Speaker Change: The we have established our own government relations presence in D. C to work with both the regulatory agencies and the new Congress and ultimately Dan we see this as a bipartisan issue appealing to Republicans due to its deregulatory nature and to Democrats as a consumer issue by preserving local news service in communities across the country.

Speaker Change: While we're on the subject I'd like to take a moment to interject a little history for context I took the company public in 2003 at roughly at 12 times EBITDA multiple due in part to the prospect of deregulation coming from the 100, <unk> Congress, which took office in January of 2000 2004.

Speaker Change: My point being that progress on deregulation has been a catalyst for multiple expansion in the past. So we plan to move with a sense of urgency on this as well as push for the formal adoption of <unk> 3.0, as our industry's transmission standard that is our and our trade Association's number two priority with this new administration.

Speaker Change: In Australia as to timing and expectations our work begins.

Speaker Change: In earnest and obviously, we will keep you posted.

Speaker Change: As our results.

Speaker Change: Begin to bear fruit as it relates to news nation.

Speaker Change: And last year's upfront and this past year. This current year is upfront.

Speaker Change: <unk> had conversations with literally hundreds of advertisers and there was a consensus or a sense out there that advertisers were avoiding news as a day part National News National Cable news is a big part.

Speaker Change: Because of what they saw as a toxic environment, we obviously been working hard to.

Speaker Change: Dispel that notion as it relates to news nation.

Speaker Change: We think our proof points on all of the unbiased surveys and original content.

Speaker Change: Surveys that are out there continue to put us right down the middle of the fairway with our content and that this is an island and an area in an environment that may be on others as more toxic, but I will say that we have watched both broadcast and cable networks over the last.

Speaker Change: A few days and few weeks and it seems is there may be a kind of alert gentler.

Speaker Change: Consensus emerging that May be fact, based journalism will come back into Vogue as well as.

Speaker Change: Eliminating the level of Actavis journal lumps out there so maybe the Newsday part will come back in favor again, we've had nice growth in both audience and in revenues supporting our new our products at news nation. So obviously, that's coming off of a very low base, but at the same time. It is consistent growth and that's all I can ask our people to do.

Speaker Change: And then on as it relates to the CW you saw that obviously, we've year to date reduced the losses, there by about $119 million I think we previously said in the fourth quarter, we're going to probably give a little bit about give a little bit of that back, but we'll still be hitting our our target of over $100 million of improvement in the year.

Speaker Change: In 2025, we expect to continue to continue.

Speaker Change: Continuing the trend in terms of improvement and I think Mike mentioned this in his call. We've got a significant percentage of the distribution deals up for renewal for the CW in 2025, which should position us well for 2026 right now, it's really kind of more about got our programming in place a lot of the sports programming that vary.

Speaker Change: Nicely weighted.

Speaker Change: Now about driving advertising revenue and.

Speaker Change: And distribution revenue to get us over the top.

Speaker Change: Super helpful. Thank you so much.

Speaker Change: The next question is from Benjamin <unk> from Deutsche Bank. Please go ahead.

Speaker Change: Hey, good morning, Thanks for taking the question.

Speaker Change: I appreciate all the color on the on the video ecosystem.

Speaker Change: Wondering you guys have a big round of renewals coming up next year, how do you see the ecosystem during that round of renewals compared to prior cycles as far as your ability to take price or any other important factors. Thanks.

Speaker Change: Okay.

Speaker Change: Well I think the biggest unknown obviously is the rate of attrition, we opined on that and I think those data points out there to support our point of view I think in terms of how distributors are approaching deals I think you can look at.

Speaker Change: The recent trends and obviously from Directv to charter in particular they've pursued.

Speaker Change: Our model of bundling DTC products with their linear video.

Speaker Change: As Terry said in his opening remarks, we sort of look at ourselves in the same boat as Fox in that regard, which is that's kind of someone else's war to worry about how do they reconcile their DTC products with their linear in terms of how do we sell.

Speaker Change: Our our linear products I think we'll sell them the same way, we always have and in fact with increasing appeal.

Speaker Change: At the CW and in these nation for the base for the reasons that we articulated so I think we'll go into the business. The same way, we always have we think our content.

Speaker Change: We'll not only continue to resonate, but as we mentioned in terms of the concentration of viewers who are.

Speaker Change: More prone to watch our programming inside the bundled TV.

Speaker Change: Ecosystem, we think will go from strength to strength on that going forward.

Speaker Change: And then on core advertising I was hoping we could drill a little bit more into any categories are local versus national that you guys saw sort of play out during the quarter. Thanks.

Speaker Change: Yes, I mean look from a category perspective, we had about <unk>.

Speaker Change: 54% of our categories were down.

Speaker Change: <unk> was an improvement over Q2, but that was in part aided by the impact of the Olympics I think the.

Speaker Change: You know as our large enough in terms of categories in terms of what was down and what was what was up I think our largest a declining category was auto and that was I think driven in part by a couple of different things. One is just the fact that the dealers have lower inventory on their lots and just interest rates are just so high with respect to <unk>.

Speaker Change: At the <unk>.

Speaker Change: Consumer can can leverage.

Speaker Change: As it relates to just kind of local versus national in the quarter, we saw sort of a similar trend that we've been seeing historically, which is R. Our national revenue is down.

Speaker Change: Kind of in the.

Speaker Change: Teens percentage and local with kind of more stable, but that's been the continuation of the trend that we've seen over time, we continue to do very well from a local perspective on the digital side of things with R.

Speaker Change: Our revenue up double digits in terms of growth on the digital side.

Speaker Change: Thanks, that's helpful.

Speaker Change: The next question is from Steven Cahall from Wells Fargo. Please go ahead.

Speaker Change: Thank you. So your full year political number I was just wondering if you could put that in context of some of the guidance you gave during the year I think that was something like low teens percentage of broadcast political spend I think the dust is still settling in terms of what the overall cycle was and what it was for broadcast so just curious how that number kind of fits in.

Speaker Change: There and certainly with at least one of your peers. We saw some money move late in the cycle. So it does seem like we continue to get more and more dynamic, but also bigger cycles. So again would just love to kind of get your context within all of that.

Speaker Change: And then.

Speaker Change: You talked about the 50 <unk> CW affiliate stations you now have.

Speaker Change: How do we think about what net retrans it looks like for the CW at this point and what you are able to drive there from a cash flow perspective.

Speaker Change: One of the key contributors to the improvements in losses in the quarter and was wondering if you have any thoughts about maybe when you might get to breakeven on the CW. Thank you.

Speaker Change: So on the on the political side of things, we have talked about a low teens market share. Obviously, the dust is still settling on what the numbers are but we believe we were in line with what that guidance was I think one thing just to note Steve is that.

I think the dust is still settling in terms of what the overall cycle was and what it was for broadcast so just curious how that number kind of fits in there and certainly with at least one of your peers. We saw some money move late in the cycle. So it does seem like we continue to get more and more dynamic but also bigger cycles. So again, we're just love to kind of get your context within all of that.

Speaker Change: There's a lot of political numbers out there in terms of what the revenues are they talk about the cycle.

Michael: Michael includes 'twenty, three and 'twenty four.

Michael: Need to make sure. When you are looking at those numbers that you kind of parse that apart in terms of the expectations for the individual years.

<unk>.

And then you talked about the 50 <unk> CW affiliate stations you now have.

How do we think about what net retrans looks like for the CW at this point and what you are able to drive there from a cash flow perspective is that one of the key contributors to the improvement in losses in the quarter and was wondering if you have any thoughts about maybe when you might get to breakeven on the CW. Thank you.

Michael: In terms of the you know the election money I think yes, we did.

Michael: Did see like.

Michael: It was a little bit of a different a different year in terms of the money kind of moving around.

Michael: Number of the largest markets for spending were.

Michael: Some markets that made that nexstar wasn't even in but I think at the end of the day, we still achieved a record year here versus the 2020 presidential election as of election day, and that's really just a testament to the breadth of our portfolio and the fact that when that money moves usually we're there to catch it there are some situations, where we're not there and that.

So on the on the political side of things, we have talked about a low teens market share. Obviously, the dust is still settling on what the numbers are but we believe we were in line with what that guidance was I think one thing just to note is that.

Michael: That does have an impact.

Michael: On the margin.

There is a lot of political numbers out there in terms of what the revenues are they talk about the cycle.

Speaker Change: As it relates to.

Speaker Change: The CW in terms of the profitability and bringing back those affiliations in house.

Michael includes 'twenty, three and 'twenty four.

Just need to make sure when you are looking at those.

Speaker Change: Cw's profitability is only affected by.

Numbers that you kind of parse that apart in terms of the expectations for the individual years.

Speaker Change: The nexstar ownership by to the extent of the intercompany distribution agreement right because the CW has affiliation agreements with with Nexstar and with all of the other affiliations.

In terms of the you know the election money I think yeah. We did we did see like.

It was a little bit of a different.

Ear in terms of the money you're kind of moving around.

A number of the largest markets for spending were.

Speaker Change: That is not sort of a material driver of these improvements in terms of the revenue in fact, we track this including and excluding those factors.

Some markets that maybe that nexstar wasn't even in but I think at the end of the day, we still achieved a record year here versus the 2020 presidential election as of election day, and that's really just a testament to the breadth of our portfolio and the fact that when that money moves usually we're there to catch it there are some situations, where we're not there and that.

Speaker Change: Really has not been a.

Speaker Change: A driver at all for that improved profitability.

Speaker Change: And look we are continuing to set up to achieve the profitability timeline that we talked about.

That does have an impact.

Speaker Change: And we will have more on that in our in our year end results. When we set up the guidance for 25.

On the margin.

As it relates to the.

The CW in terms of the profitability and bringing back those affiliations in house.

Speaker Change: Thank you.

Speaker Change: The next question is from Jason Bazinet from Citibank. Please go ahead.

The CW profitability is only affected by them.

Speaker Change: I just.

The nexstar ownership to the extent of the intercompany distribution agreement right because the CW affiliation agreements with with Nexstar and with all the other affiliations.

Speaker Change: Wanted to follow up on your under regulatory comments.

Speaker Change: I get your point about sort of a broad two regulatory push at the national and local level going through Congress working with Democrats and Republicans, but my question is is there.

That is not sort of a material driver of these improvements in terms of the revenue in fact, we track this including and excluding those those factors.

Speaker Change: Sub set of issues that you are interested in that could just.

Speaker Change: Make its way through a rule, making that the FCC.

Speaker Change: That could be sort of simpler and we sort of already have.

So it really has not been.

A driver at all for that improved profitability.

Speaker Change: The Democrat Republican backdrop, given that we know the answer to the presidential election or is that not the right way to think about it we should be focused on loss getting past for bills coming out of Congress and getting signed by the executive.

And look we are continuing to set up to achieve the profitability timeline that we talked about.

And we'll have more on that in our in our.

Our year end results when we set up the guidance for 25.

Speaker Change: Well I think that more likely than not legislation will be needed, particularly to change the national cap because thats, how the current cap was established.

Thank you.

The next question is from Jason Bazinet from Citibank. Please go ahead.

Speaker Change: However, when you look at in market.

I just.

Wanted to follow up on your under regulatory comments.

Speaker Change: Caps or rules of rigs.

Speaker Change: As likely could be dealt with added administrative level either through the quadrennial review process or other processes to be determined. So I think it's a mix of both and obviously, we will we will be as present in the agencies as we are on the hill.

I get your point about sort of a broad regulatory push at the national and local level going through Congress working with Democrats and Republicans put my question is is there.

Sub set of issues that you are interested in that could just make its way through a rule, making that the FCC.

There could be sort of simpler and we sort of already have.

Speaker Change: <unk> four ownership perform that would reflect today's.

The Democrat or Republican backdrop, given that we know the answer to the presidential election or is that not the right way to think about it we should be focused on loss.

Speaker Change: The realities of today's marketplace.

Speaker Change: That's great and is it related.

Speaker Change: That is that is exclusively the province of the of the agencies in terms of moving from experimental licenses too.

Past for bills coming out of Congress and getting signed with executive.

Speaker Change: Two actual licenses to the end of the simulcast requirement for that the Sunset and then ultimately to a potential manned flash cut mandate date.

Well I think that more likely than not legislation will be needed, particularly to change the national cap because that's how the current cap was established.

However, when you look at in market.

Speaker Change: They are all things that could be dealt through the administrative process. So.

Caps or rules of rigs.

Speaker Change: We'll be working all all angles, there to try and deliver meaningful <unk>.

It was likely could be dealt with added administrative level either through the quadrennial review process or other processes to be determined. So I think it's a mix of both and obviously, we will we will be present in the agencies as we are on the hill.

Speaker Change: Progress not only for our industry, certainly our company, which will benefit our shareholders.

Speaker Change: That's super helpful. Thank you for clarifying.

Speaker Change: The next question is from Craig Huber from Huber Research partners. Please go ahead.

Press four ownership perform that would reflect today's.

Craig Huber: Yes. Thank you. The first question, we haven't heard from you in a while.

The realities of today's marketplace.

That's great and is it related.

Speaker Change: Alternative uses.

That is a price that is exclusively the province of the of the <unk>.

Speaker Change: Spectrum here on how to potentially monetize that going wrong go down the road and I know, it's a long term proposition.

<unk> in terms of moving from experimental licenses too.

Speaker Change: It's a big upside potentially for you and.

Two actual licenses to the end of the simulcast requirement for that to Sunset and then ultimately to a potential man flash cut mandate date.

Speaker Change: What are you guys are working on lately is there anything new to talk about share with shareholders.

Speaker Change: The first question. Thank you.

Speaker Change: Sure. There's a lot that we're working on and in conjunction with other companies in this space, we're just not really ready to.

Those are all things that could be dealt through the administrative process. So.

Speaker Change: Now anything or anything.

It will be we'll be working all all angles, there too Brian deliver meaningful.

Speaker Change: I continue to believe that we will have our first contracts this year.

<unk> not only for our industry, certainly our company, which will benefit our shareholders.

Speaker Change: Money paying beyond multi cash that would be for ancillary uses of the spectrum. They will not be for significant dollars, but they will be proof points that people are willing to.

Super helpful. Thank you for clarifying.

The next question is from Craig Huber from Huber Research partners. Please go ahead.

Speaker Change: Stablish a proof of concept of <unk>.

Yes. Thank you my first question, we haven't heard from you in a while.

Speaker Change: Whether it's navigation or.

Speaker Change: Or offloading data transmission or digital signage or things like that.

Alternative uses.

Spectrum here on how to potentially monetize that going wrong go down the road and I know, it's a long term proposition.

Speaker Change: There is a lot going on and Mike Beard is leaving a lot of those efforts along with Brett Jenkins, our CTO in this space and Mike I don't know if you want to add any color but.

The big upside potentially for you.

What are you guys working on lately is there anything new to talk about share with shareholders.

Speaker Change: The lack of announcement is not for the want of activity because theres plenty going on behind the scenes no I think that's exactly right I think we'll save our announcements for moments of substance.

The first question. Thank you.

Sure. There is a lot that we're working on and in conjunction with other companies in this space, we're just not really ready to.

Announce anything or saying anything.

Speaker Change: Okay. Thank you for that my second question, the CW losses down <unk> $36 million year over year third quarter is there anything that you guys would want to call out to help drive those those losses lower is it all just cost savings.

I continue to believe that we will have our first contracts this year.

Money paying beyond multi cash that would be for ancillary uses of the spectrum.

Will not be for significant dollars, but they will be proof points that people are willing to establish a proof of concept of.

Speaker Change: On the revenue side, you called out as well.

Speaker Change: Well I'll speak first and land can jump in and I, just I do want to clarify that you said earlier the improvements at this at the affiliate side of the level of our owned and operated affiliates is on the station side the level. None of those improvements are being used to offset any operating losses at the network level. So the CW pace.

Whether it's navigation or.

Or offloading data transmission.

Our digital signage or things like that there is a lot going on and Mike Beard is leaving a lot of those efforts along with Brett Jenkins, our CTO in this space and Mike I don't know if you want to add any color but.

Speaker Change: Sure.

Speaker Change: As a pay as you go if you will but as it relates to <unk>.

Lack of announcement is not for the want of activity because theres plenty going on behind the scenes no I think that's exactly right.

Speaker Change: Obviously, we have.

Speaker Change: Increase the amount of hours of programming of the network by 40%.

Save our announcements for moments of substance.

Speaker Change: That is due almost exclusively to the expansion of sports and so thats a day part that we weren't selling before and so there is new revenue fresh revenue coming there.

Okay. Thank you for that my second question, the CW losses down <unk> $36 million year over year third quarter is there anything that you guys would want to call out to help drive those those losses lower is it all just cost savings we're doing on the revenue side, you called out as well.

Speaker Change: And so it is a combination of new opportunities for revenue and certainly cost cuts.

Speaker Change: Again, I want to reiterate that we increase the programming hours by 40%, while reducing the programming cost.

Well I'll speak first and land can jump in and I, just I do want to clarify that you said earlier the improvements at this at the affiliate side of the level of our owned and operated affiliates is on the station side a level. None of those improvements are being used to offset any operating losses at the network level. So the CW pace.

Speaker Change: Substantially so.

Speaker Change: There is a lot of attention to.

Speaker Change: Making this network.

Speaker Change: Operate and the realities that people are willing to pay for live events and live sports and less and less for scripted programming and so we're continuing to pivot then at work in that direction to take advantage of both the revenue and the opportunity to save costs. There and do you have any more detail you went off yeah. I mean look I think in the third quarter you can track.

As a pay as you go if you will but as it relates to.

Obviously, we have.

Increase the amount of hours of programming of the network by 40%.

That is due almost exclusively to the expansion of sports and so thats a day part that we weren't selling before and so there is new revenue fresh revenue coming there.

Speaker Change: <unk> Youll see it in the Q when it gets published later today you can just see the the.

Speaker Change: The improvement in terms of the amortization of broadcast rights, which we break out in the in the queue. So a good portion of that improvement on year to date has been really kind of on the programming side.

And.

So it is a combination of new opportunities for revenue and certainly cost cuts.

Again, I want to reiterate that we increase the programming hours by 40%, while reducing the programming costs.

Speaker Change: In the quarter, we did have improvement on the revenue side.

Speaker Change: It's kind of a combination of both but more so on the cost side at the moment.

Substantially so.

There is a lot of attention to.

Speaker Change: And then my final question, if I could you guys talked about you don't low double digits for AD revenue in the fourth quarter, obviously hurt by political displacement as you've talked about if you if you could.

Making this network.

Operate and the realities that people are willing to pay for live events and live sports and less and less for scripted programming and so we're continuing to pivot then at work in that direction to take advantage of both the revenue and the opportunity to save costs. There and do you have any more detail you went off yeah. I mean look I think in the third quarter you can track.

Speaker Change: Isolate just the month of December how the bookings are the TDK seeds.

Speaker Change: Looking December year over year at the same juncture is there any material change in the trend <unk> seen prior months flawless displaced in the queue.

<unk> Youll see it in the Q when it gets published later today you can just see the the.

Speaker Change: Underlying trend looking better in December was more of the same.

Speaker Change: Well it is but it's also obvious that it would because there is less demand for political revenue and again in 2020.

Improvement in terms of the amortization of broadcast rights, which we break out in the in the queue. So a good portion of that improvement on year to date has been really kind of on the programming side.

Speaker Change: We had a substantial runoff in the state of Georgia, which we're not anticipating that would put pressure on our inventory four stations in those states nor would we have that additional political revenue to add to the total.

In the quarter, we did have improvement on the revenue side.

It's kind of a combination of both but more so on the cost side at the moment.

Speaker Change: So yes.

And then my final question, if I could you guys talked about you don't low double digits for AD revenue in the fourth quarter, obviously hurt by political displacement as you've talked about if you if you could.

Speaker Change: Pacings are better.

Speaker Change: And in December than they are in November but.

Speaker Change: We expected that yes, absolutely I mean, it's definitely.

Isolate just the month of December how the bookings are the TVP seats.

Speaker Change: Definitely.

Speaker Change: If we can be better in December than it is December October and November.

Looking December year over year at the same juncture is there any material change in the trend <unk> seen prior months before this displacement Q.

Speaker Change: Sorry, when you compare December versus a year ago. How December was looked at this juncture how.

Speaker Change: How is that looking at yes.

Speaker Change: Yes, that's what pacing is so thats were comparing it versus the prior year periods and also sequentially, yes, but are you asking what the 23 versus <unk> growth rate was versus the 24 versus <unk> 24 versus 23 growth rate.

Underlying trend looking better in December was more of the same.

Well it is but it's also obvious that it would because there is less demand for political revenue and again in 2020.

Speaker Change: Trying to get a sense of what the bookings at this stage today.

We had a substantial runoff in the state of Georgia, which we're not anticipating that would put pressure on our inventory where stations in those states nor would we have that additional political revenue to add to the total.

Speaker Change: Two days after the election looking out into the month of December how is that looking versus December last year. At this same juncture three plus weeks or before the month starts yes, we don't really give pacing down to the week by week day by day basis here.

So yes.

Pacings are better.

And in December than they are in November but.

Speaker Change: Bookings are looking better in terms of they are less down in December of 'twenty four than they were in October and November of 'twenty, four and I think.

We expected that yes, absolutely I mean, it's yeah, it's definitely.

Speaker Change: Directionally, that's about all of the level of detail, we're comfortable giving at this point, we're not going to start to establish updating our pacing by the day.

Speaker Change: Okay. Thanks, guys.

Speaker Change: The next question is from Jim Goss from Barrington Research. Please go ahead.

Speaker Change: Thanks, following up a little to the discussion we've been having here.

Speaker Change: Is it reasonable to think that the next near term phase of growth is more likely to come from cost efficiencies.

Speaker Change: More than revenue growth as retrans levels.

Speaker Change: And CW in news nation are still in relatively early stages of development.

Speaker Change: Or are there other drivers we.

Speaker Change: We should be focusing in.

Speaker Change: On the revenue side.

Speaker Change: I think at a macro level. There is a lot of elements at play there is a school of thought out here that much like the stock market you will see a relief rally in spending because of the uncertainty is out of the market and if the fed cuts interest rates later today.

Speaker Change: <unk>.

Speaker Change: At the end of that could continue to add to it now whether that happens or not we don't know, but I think.

Speaker Change: Sure.

Speaker Change: There is a general sense that that a Republican administration will be better for business than a Democratic administration would have been how that manifests itself going forward is there a cut in the corporate tax rates.

Speaker Change: Generally.

Speaker Change: That could impact people's interest willingness and capacity to spend on advertising.

Speaker Change: I do think as we add and Michael mentioned, we are.

Speaker Change: Looking throughout the organization to mine efficiencies and realign.

Speaker Change: Reporting structures and workflows to represent not only the realities of our business the realities of the economic environment.

Speaker Change: So there will be continued.

Speaker Change: Elimination of what we believe to either be duplicate or not necessary costs.

Perry Sook: <unk> been a part of our DNA I think since I founded the company almost 30 years ago.

Speaker Change: And obviously with.

Speaker Change: New revenue opportunities given the growth at news nation and the addition of sports at the CW I think all of those elements cumulative will go into <unk>.

Speaker Change: <unk>, forming our outlook and guidance for 2025, which is Leann mentioned, we will be delivering to you early in the year. When we report our Q4 results.

Speaker Change: Alright. Thanks, So one other thing I'm wondering are you do you have.

Speaker Change: Or could you update us.

Speaker Change: S based delivery of.

Speaker Change: Full local affiliates on smart Tvs, rather than the SaaS versions, and whether whether or not pursue that benefits your AD revenue dollars.

Speaker Change: Full way.

Speaker Change: Sure we're in the process actually of expanding.

Speaker Change: Those those products right now so when you talk about full affiliates being delivered via apps I think you need to make a distinction between the big four affiliates versus our independent stations and then inside the big for the network programming versus the non network programming. Obviously, we don't have the right to take the network programming outside of the <unk>.

Speaker Change: <unk>.

Speaker Change: Onto digital apps that we control.

Speaker Change: Our business there.

Speaker Change: Is it already is in the case of KTLA WGN for instance, where we have some robust apps with healthy audiences there.

Speaker Change: That are comprised primarily of local programming that almost exclusively of local programming, including digital only programming. We will continue to take that model and expand it across the company.

Speaker Change: We're in the process of doing that I think youll see some announcements.

Speaker Change: Of launches certainly this year and going into Q1 at scale.

Speaker Change: So the full live local local affiliates.

Speaker Change: Any of your major network affiliates.

Speaker Change: Will require.

Speaker Change: Some further agreement with the networks, even though you would be providing them with that.

Speaker Change: You know that.

Speaker Change: Distribution opportunity as well.

Speaker Change: Yes that would require an agreement with the big four networks you can look at what Theyre doing that they don't even do that really for their own businesses right.

Speaker Change: <unk>.

Speaker Change: The networks doing their full live network streaming inside individual station apps those are concentrated inside network apps in their DSC products.

Speaker Change: So down the road that will be interested in expanding to reach by doing things like that with us and we certainly hope so I think it would be something to consider but that's not on our roadmap right now.

Speaker Change: Okay, maybe one last one when you were talking about the deregulation potential.

Speaker Change: Potential.

Speaker Change: I guess one of the Holy Grails with duopoly is tough for stage two of the top four stations and large markets do you think thats more realistic opportunity with.

Speaker Change: The new Republican administrations.

Speaker Change: Yes, Jim that opportunity exists today, but it requires a waiver from the FCC and Theres no presumption on that so.

Speaker Change: There is an opportunity how realistic that is to actually.

Speaker Change: Excess under the current administration, you haven't seen a lot of announcements of combinations of big four.

Speaker Change: Two of the top four rated stations in the marketplace and it's not just big for its top four in terms of their viewership. So.

Speaker Change: In theory that opportunity already exists in practice in a Republican administration, maybe it will be.

Speaker Change: These year to access and act upon.

Speaker Change: Alright, Thank you very much.

Speaker Change: Yes.

Speaker Change: The next question is from Barton Crockett from Rosenblatt. Please go ahead.

Barton Crockett: Okay. Thanks for taking the question.

Speaker Change: The regulatory situations Thats very interesting given.

Speaker Change: The change in also discussion from some others on earnings calls here in your sector.

Speaker Change: And.

Speaker Change: I was just wondering if you kind of asked about one of the regulations specifically the ownership cap at 39% maybe.

Speaker Change: Adjusted for the UHF.

Speaker Change: Which obviously internet guys don't face.

Speaker Change: And in equity there.

Speaker Change: What do you think are the prospects potentially for that being eliminated that ownership cap.

Speaker Change: And if it was given all the other anti trust.

Speaker Change: <unk> do you think.

Speaker Change: It would matter for you guys or do you think that could be maybe a big opportunity to get back into the M&A game.

Speaker Change: Yes, I think it would be a huge opportunity.

Speaker Change: Listen.

Speaker Change: You've made the case, if you'd like to join our growing GR team in D. C. We've got some openings.

Speaker Change: But.

Speaker Change: We see that.

Speaker Change: Time being now.

Speaker Change: And we see it as as I said in my remarks.

Speaker Change: So the first question the bipartisan issue.

Speaker Change: Republicans would see it as deregulation good for business Democrats and in fact, all people would see it as an avenue to preserve local journalism.

Speaker Change: Congress man and woman I have spoken to in the last year does not want a future where Theyre news is delivered by a chatbot office server hopefully from somewhere in this country, but no one really knows and so what do we need to do to preserve local journalism, where you have to have strong companies that are producing that journalism.

Speaker Change: Have to be able to compete with an even playing field with big Tech who.

Speaker Change: Has unfettered access as I said every screen in your House My House My car My pocket.

Speaker Change: And currently we're capped to 39% over the UHF discount maybe you can do a little better than that but we can't reach out but we're not allowed to reach every television home in America with our with our local station footprint.

Speaker Change: And so to preserve that last mile. We think there is the Republic has invested interest in maintaining a free and independent press and we see broadcast journalism.

Speaker Change: Remaining or becoming that last bastion of our free and independent press at the local level and so.

Speaker Change: There is no one that that can look you in the eye with a straight face and say that the current regulations make any sense.

Speaker Change: But as the head of our G R.

Speaker Change: Operation in Washington, DC says one of the hardest things to do because of all of the competition for time in mind share of the regulators and legislators is to get someone to care and that's going to be our job is to deliver an impassioned plea and a logical case as to why these rules should be eliminated.

Speaker Change: And we hope will carry the day, but I mean, we're obviously investing.

Speaker Change: We have hired and are establishing a <unk> office in Washington, I am spending a good deal of my time, Bayer and on this and.

Speaker Change: We will do everything we can in conjunction with our trade Association to make the case inside the beltway as to why these regulations that have not been addressed since 2004 need.

Speaker Change: Need to be addressed in 2020 for 2025 and ultimately changed.

Speaker Change: Okay.

Speaker Change: And then on <unk>.

Speaker Change: Also on the topic of M&A.

Speaker Change: Okay.

Speaker Change: Comcast came out with the announcement that they are going to explore spinning off their cable networks.

Speaker Change: <unk>.

Speaker Change: David Zaslav I think was talking about.

Speaker Change: Different levels of M&A interest at Warner Brothers.

Speaker Change: It seems like there could be some cable networks out there that could be.

Speaker Change: You could look at from an M&A perspective in theory, and I was just wondering.

Speaker Change: Is that an asset class that all interest you could there be you've done some stuff kind of around that with news nation and CW sort of.

Speaker Change: The cable networks get bigger.

Speaker Change: Bigger scale be interesting or is that really just a distraction from what you do.

Speaker Change: Well I think if you rewind the tape.

Speaker Change: This call and review the comments, we've said that we have very little interest in <unk>.

Speaker Change: Establishing our.

Speaker Change: Expanding our cable network portfolio now as I always say there is a price for everything but if we had the opportunity to expand our broadcast portfolio and the cable opportunity on our desk at the same time the obvious one we would focus on is broadcast we believe in the broadcast model the presence and the ethos.

Speaker Change: System its status in the ecosystem and so and I think by the fact that we have built the largest local broadcast company in America, It's obviously, where our interest and preference would lie.

Speaker Change: Okay, and I apologize if thats. The duplicate question just juggling some other things coming in but thank you for the answer I appreciate it.

Speaker Change: Okay.

Speaker Change: This concludes the question and answer session I would like to turn the floor back over to Perry Sook, Chairman and Chief Executive Officer for closing comments.

Perry Sook: Well. Thank you very much operator, I just wanted to finish by saying our strong financial framework combined with our significant free cash flow generative nature of our business continues to enable nexstar to deliver strong levels of free cash flow, while maintaining a strong balance sheet and low leverage looking ahead, we will continue to execute against our long term strategies.

Speaker Change: Taking the necessary actions and making the required investments to shape the future of the company, 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 February when we report our Q4 results.

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