NEXSTAR MEDIA GROUP INC
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
NXST$190.02+1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000950170-24-093776
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0000950170-24-123213
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 92 previous paragraphs and 94 current paragraphs.
55 unchanged; 33 reworded; 6 added; 4 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
Nine Months Ended September 2024 Highlights
Current report
Renewed The CW Network affiliation agreements with Gray Television, Inc. for 38 local television stations across the country.
Current report
Renewed affiliation agreements with CBS Television Network in 42 markets.
Current report
Distribution revenue increased by $121 million primarily due to the comparison with the three months ended September 30, 2023 when a dispute with an MVPD caused Nexstar stations to be dark for 76 days during the quarter, the benefit of distribution contract renewals in 2023 on terms favorable to the Company, annual rate escalators, growth in vMVPD subscribers, the addition of CW affiliations on certain of our stations, and the return of partner stations on one MVPD in January, which more than offset MVPD subscriber attrition..
Current report
Nine Months Ended September 30, 2024 Compared to the Same Period in 2023
Current report
Distribution revenue increased by $192 million primarily due to the comparison with the three months ended September 30, 2023 when a dispute with an MVPD caused Nexstar stations to be dark for 76 days during the quarter, the benefit of distribution contract renewals in 2023 on terms favorable to the Company, annual rate escalators, growth in vMVPD subscribers, the addition of CW affiliations on certain of our stations, and the return of partner stations on one MVPD in January, which more than offset MVPD subscriber attrition.
Removed paragraphs (4)
Previous report
Six Months Ended June 2024 Highlights
Previous report
Distribution revenue increased by $38 million primarily due to the successful renewal of our distribution agreements in 2023 on terms favorable to us and scheduled annual escalation of rates per subscriber, growth in vMVPD subscribers, the addition of CW affiliations on certain of our stations, and the return of our partner stations on one MVPD in January, partially offset by continued MVPD subscriber attrition. We anticipate a continued increase in retransmission fees year over year until there is a more balanced relationship between viewers delivered and fees paid for delivery of such viewers, subject to trends in subscriber attrition or growth.
Previous report
Six Months Ended June 30, 2024 Compared to the Same Period in 2023
Previous report
Distribution revenue increased by $71 million for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to the successful renewal of our distribution agreements in 2023 on terms favorable to us and scheduled annual escalation of rates per subscriber, growth in vMVPD subscribers, the addition of CW affiliations on certain of our stations and the return of our partner stations on one MVPD in January, partially offset by continued MVPD subscriber attrition. We anticipate a continued increase in retransmission fees year over year until there is a more balanced relationship between viewers delivered and fees paid for delivery of such viewers, subject to trends in subscriber attrition or growth.
Reworded paragraphs (33)
Previous wording
Net revenue increased 2.3% to $1.3 billion and 2.2% to $2.6 billion during the three and six months ended June 30, 2024, respectively, compared to the same period in 2023.
Current wording
Net revenue increased 20.7% to $1.4 billion and 8.0% to $3.9 billion during the three and nine months ended September 30, 2024, respectively, compared to the same period in 2023.
Previous wording
Returned approximately $190 million and $358 million, for the three and six months ended June 30, 2024, respectively, of capital to stockholders through repurchases of common stock and dividends, funded by cash on hand.
Current wording
Returned approximately $232 million and $590 million, for the three and nine months ended September 30, 2024, respectively, of capital to stockholders through repurchases of common stock and dividends, funded by cash on hand.
Previous wording
As of June 30, 2024, we owned, operated, programmed or provided sales and other services to 201 full power television stations and one AM radio station, including those owned by VIEs, in 117 markets in 40 states and the District of Columbia. The stations are affiliates of ABC, NBC, FOX, CBS, The CW, MyNetworkTV and other broadcast television networks. Through various local service agreements, we provided sales, programming and other services to 37 full power television stations owned by independent third parties, of which 35 full power television stations are VIEs that are consolidated into our financial statements. We also own a 75.0% interest in The CW, the fifth major broadcast network in the U.S., NewsNation, a national cable news network, two digital multicast networks, Antenna TV and REWIND TV, multicast network services provided to third parties, and a 31.3% ownership stake in TV Food Network. Our digital assets include 142 local websites, 279 mobile applications, 24 connected television applications, seven free ad-supported television channels representing products of our local television stations, The CW, NewsNation, The Hill and BestReviews, and a suite of advertiser solutions.
Current wording
As of September 30, 2024, we owned, operated, programmed or provided sales and other services to 200 full power television stations and one AM radio station, including those owned by VIEs, in 116 markets in 40 states and the District of Columbia. The stations are affiliates of ABC, NBC, FOX, CBS, The CW, MyNetworkTV and other broadcast television networks. Through various local service agreements, we provided sales, programming and other services to 37 full power television stations owned by independent third parties, of which 35 full power television stations are VIEs that are consolidated into our financial statements. We also own a 75.0% interest in The CW, the fifth major broadcast network in the U.S., NewsNation, a national cable news network, two digital multicast networks, Antenna TV and REWIND TV, multicast network services provided to third parties, and a 31.3% ownership stake in TV Food Network. Our digital assets include 138 local websites, 121 mobile applications, 91 weather applications and 17 lifestyle and sports applications across local stations, NewsNation and The Hill. The portfolio also includes seven connected television applications and three free ad-supported television channels from The CW and The Hill.
Previous wording
We do not own the consolidated VIEs or their television stations. However, we are deemed under U.S. GAAP to have controlling financial interests for financial reporting purposes in these entities because of (i) the local service agreements we have with their stations, (ii) our (excluding The CW) guarantee of the obligations incurred under Mission’s senior secured credit facility, (iii) our power over significant activities affecting the VIEs’ economic performance, including budgeting for advertising revenue, certain advertising sales and, in some cases, hiring and firing of sales force personnel and (iv) purchase options granted by each consolidated VIE which permit us to acquire the assets and assume the liabilities of each of these VIEs’ stations at any time, subject to FCC consent. In compliance with FCC regulations for all the parties, each of the consolidated VIEs maintains complete responsibility for and control over programming, finances and personnel for its stations.
Current wording
We do not own the consolidated VIEs or their television stations. However, we are deemed under U.S. GAAP to have controlling financial interests for financial reporting purposes in these entities because of (i) the local service agreements we have with their stations, (ii) our (excluding The CW) guarantee of the obligations incurred under Mission’s senior secured credit facility, (iii) our power over significant activities affecting the consolidated VIEs’ economic performance, including budgeting for advertising revenue, certain advertising sales and, in some cases, hiring and firing of sales force personnel and (iv) purchase options granted by each consolidated VIE which permit us to acquire the assets and assume the liabilities of each of these VIEs’ stations at any time, subject to FCC consent. In compliance with FCC regulations for all the parties, each of the consolidated VIEs maintains complete responsibility for and control over programming, finances and personnel for its stations.
Previous wording
The Company’s revenues increased 2.3% for the three months ended June 30, 2024, compared to the same period in 2023, primarily due to higher revenues from distribution and political advertising, partially offset by lower revenue from non-political advertising.
Current wording
The Company’s revenues increased 20.7% for the three months ended September 30, 2024, compared to the same period in 2023, primarily due to higher revenues from distribution and political advertising, partially offset by lower revenue from non-political advertising.
Previous wording
Advertising revenue increased by $11 million, primarily due to an increase in political advertising of $37 million as 2024 is an election year, offset in part by a decrease in non-political revenue of $24 million due to ongoing advertising market softness.
Current wording
Advertising revenue increased by $113 million, primarily due to an increase in political advertising of $135 million as 2024 is an election year, offset in part by a decrease in non-political revenue of $22 million due to ongoing advertising market softness.
Previous wording
Direct operating expenses, consisting primarily of programming, news and technical expenses, and selling, general and administrative expenses increased by $36 million primarily due to increase in news programming, stock-based compensation expense from new restricted stock grants and the timing of restricted stock grants, direct digital operating, and various administrative expenses, partially offset by a reduction in restructuring costs at The CW.
Current wording
Direct operating expenses, consisting primarily of programming, news and technical expenses, and selling, general and administrative expenses increased by $23 million primarily due to increased news expenses related to expansion of news programming, programming expenses primarily due to lower variable programming expenses in 2023 as a result of the period when Nexstar stations were dark and stock-based compensation expense from new restricted stock grants and the timing of restricted stock grants, partially offset by lower expense from various administrative expenses.
Previous wording
Depreciation and amortization expenses decreased by $54 million, as follows:
Current wording
Depreciation and amortization expenses decreased by $30 million, as follows:
Previous wording
Amortization of broadcast rights was $87 million for the three months ended June 30, 2024, compared to $140 million for the same period in 2023, a decrease of $53 million, primarily due to lower amortization of broadcast rights at The CW of $49 million to $71 million from $120 million.
Current wording
Amortization of broadcast rights was $70 million for the three months ended September 30, 2024, compared to $98 million for the same period in 2023, a decrease of $28 million, primarily due to lower amortization of broadcast rights at The CW of $26 million to $54 million from $80 million.
Previous wording
Amortization of intangible assets was $75 million for the three months ended June 30, 2024, compared to $78 million for the same period in 2023 (no significant change).
Current wording
Amortization of intangible assets was $74 million for the three months ended September 30, 2024, compared to $78 million for the same period in 2023 (no significant change).
Previous wording
Income from equity method investments, net decreased by $16 million primarily due to a decrease in net income of TV Food Network, our largest equity method investment. TV Food Network’s net income decreased primarily due to a decrease in its advertising revenue. For additional information on our investment in TV Food Network, refer to Note 4 to our Condensed Consolidated Financial Statements.
Current wording
Income from equity method investments, net decreased by $7 million primarily due to a decrease in net income of TV Food Network, our largest equity method investment. TV Food Network’s net income decreased primarily due to a decrease in its advertising revenue. For additional information on our investment in TV Food Network, refer to Note 5 to our Condensed Consolidated Financial Statements.
Previous wording
The Company’s effective tax rates were 28.9% and 31.8% for each of the respective periods.
Current wording
The Company’s effective tax rates were 26.2% and 42.9% for each of the respective periods.
Previous wording
For the three months ended June 30, 2024, changes in the valuation allowance resulted in a 2.0% decrease to the effective tax rate. Other permanent differences, including a reduction in losses related to the minority interest in The CW, resulted in a 2.8% decrease to the effective tax rate. This is partially offset by a decrease in the excess benefit from stock option exercises and restricted stock unit vesting in 2024 compared to 2023 which resulted in a 1.3% increase in the rate.
Current wording
For the three months ended September 30, 2024, other permanent differences, including a reduction in losses related to the minority interest in The CW, resulted in a 32.7% decrease to the effective tax rate. State taxes were impacted by decreased permanent differences resulting in a 3.8% decrease to the effective rate. This was partially offset by changes in the valuation allowance which resulted in a 9.2% increase to the effective tax rate. A decrease in the excess benefit from stock option exercises and restricted stock unit vesting in 2024 compared to 2023 resulted in a 3.5% increase in the rate. The effective rate for the three months ended September 30, 2024 is normalized compared to the same period in 2023 which reflected a significantly lower pre-tax net income. The rate changes discussed reflect that normalization impact.
Previous wording
The Company’s revenues increased 2.2% for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to higher revenues from distribution and political advertising, partially offset by lower revenue from non-political advertising.
Current wording
The Company’s revenues increased 8.0% for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to higher revenues from distribution and political advertising, partially offset by lower revenue from non-political advertising.
Previous wording
Advertising revenue increased by $6 million for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to an increase of $67 million in political advertising as 2024 is an election year, offset in part by a decrease in non-political revenue of $61 million due to ongoing advertising market softness.
Current wording
Advertising revenue increased by $121 million primarily due to an increase of $202 million in political advertising as 2024 is an election year, offset in part by a decrease in non-political revenue of $81 million due to ongoing advertising market softness.
Previous wording
Direct operating expenses, consisting primarily of programming, news and technical expenses, and selling, general and administrative expenses increased by $22 million primarily due to increase in news programming, stock-based compensation expense from new restricted stock grants and the timing of restricted stock grants, direct digital operating, and various administrative expenses, partially offset by a reduction in restructuring costs at The CW.
Current wording
Direct operating expenses, consisting primarily of programming, news and technical expenses, and selling, general and administrative expenses increased by $60 million primarily due to increased news expenses related to expansion of news programming, programming expenses primarily due to lower variable programming expenses in 2023 as a result of the period when Nexstar stations were dark, stock-based compensation expense from new restricted stock grants and the timing of restricted stock grants, and direct digital operating expenses, partially offset by lower expense from various administrative expenses.
Previous wording
Depreciation and amortization expense decreased by $113 million, as follows:
Current wording
Depreciation and amortization expense decreased by $143 million, as follows:
Previous wording
Amortization of broadcast rights was $156 million for the six months ended June 30, 2024, compared to $269 million for the same period in 2023, a decrease of $113 million, primarily due to lower amortization of broadcast rights at The CW of $104 million to $123 million from $227 million.
Current wording
Amortization of broadcast rights was $226 million for the nine months ended September 30, 2024, compared to $367 million for the same period in 2023, a decrease of $141 million, primarily due to lower amortization of broadcast rights at The CW of $130 million to $177 million from $307 million.
Previous wording
Depreciation of property and equipment was $91 million for the six months ended June 30, 2024, compared to $87 million for the same period in 2023 (no significant change).
Current wording
Depreciation of property and equipment was $137 million for the nine months ended September 30, 2024, compared to $131 million for the same period in 2023 (no significant change).
Previous wording
Amortization of intangible assets was $151 million for the six months ended June 30, 2024, compared to $155 million for the same period in 2023 (no significant change).
Current wording
Amortization of intangible assets was $225 million for the nine months ended September 30, 2024, compared to $233 million for the same period in 2023 (no significant change).
Previous wording
Income from equity method investments, net decreased by $22 million primarily due to a decrease in net income of TV Food Network, our largest equity method investment. TV Food Network’s net income decreased primarily due to a decrease in its advertising revenue. For additional information on our investment in TV Food Network, refer to Note 4 to our Condensed Consolidated Financial Statements.
Current wording
Income from equity method investments, net decreased by $30 million primarily due to a decrease in net income of TV Food Network, our largest equity method investment. TV Food Network’s net income decreased primarily due to a decrease in its advertising revenue. For additional information on our investment in TV Food Network, refer to Note 5 to our Condensed Consolidated Financial Statements.
Previous wording
Interest expense, net increased by $9 million, primarily due to increases in interest rates in the Company’s outstanding loans under its senior secured credit facilities, partially offset by decreases in interest expense from debt repayments.
Current wording
Interest expense, net increased by $8 million, primarily due to increases in interest rates in the Company’s outstanding loans under its senior secured credit facilities, partially offset by decreases in interest expense from debt repayments.
Previous wording
The Company’s effective tax rates were 27.8% and 32.1% for each of the respective periods.
Current wording
The Company’s effective tax rates were 27.2% and 32.7% for each of the respective periods.
Previous wording
For the six months ended June 30, 2024, changes in the valuation allowance resulted in a 3.4% decrease to the effective tax rate. Other permanent differences, including a reduction in losses related to the minority interest in The CW, resulted in a 1.9% decrease to the effective tax rate. This is partially offset by a decrease in the excess benefit from stock option exercises and restricted stock unit vesting in 2024 compared to 2023 which resulted in a 1.0% increase in the rate.
Current wording
For the nine months ended September 30, 2024, changes in the valuation allowance resulted in a 3.4% decrease to the effective tax rate. Other permanent differences, including a reduction in losses related to the minority interest in The CW, resulted in a 3.6% decrease to the effective tax rate. This is partially offset by a decrease in the excess benefit from stock option exercises and restricted stock unit vesting in 2024 compared to 2023 which resulted in a 1.4% increase in the rate.
Previous wording
Net cash flows provided by operating activities decreased by $227 million during the six months ended June 30, 2024, compared to the same period in 2023. This was primarily due to an increase in uses of cash from (i) timing of receipts and payables of $174 million, including prepaying fees associated with our TBA of KAZT-TV and (ii) a decrease in distribution from our equity investment in TV Food Network of $112 million, partially offset by a decrease in payments for broadcast rights of $52 million.
Current wording
Net cash flows provided by operating activities increased by $22 million during the nine months ended September 30, 2024, compared to the same period in 2023. This was primarily due to an increase in sources of cash from (i) an increase in operating income (excluding non-cash transactions of) of $246 million and (ii) a decrease in payments for broadcast rights of $82 million, partially offset by (i) timing of receipts and payables of $139 million, including prepaying fees associated with our TBA of KAZT-TV, (ii) a decrease in distribution from our equity investment in TV Food Network of $116 million and (iii) higher income taxes paid of $45 million.
Previous wording
Net cash flows used in investing activities decreased by $34 million during the six months ended June 30, 2024, compared to the same period in 2023. This was primarily due to the proceeds received from the disposal of an investment in connection with BMI’s sale to New Mountain Capital of $40 million, partially offset by an increase in capital expenditures of $4 million.
Current wording
Net cash flows used in investing activities decreased by $69 million during the nine months ended September 30, 2024, compared to the same period in 2023. This was primarily due to the proceeds received from the disposal of an investment in connection with BMI’s sale to New Mountain Capital of $40 million and a decrease in uses of cash from payment of acquisitions during the nine months ended September 30, 2023 of $38 million.
Previous wording
Net cash flows used in financing activities decreased by $52 million during the six months ended June 30, 2024, compared to the same period in 2023. This was primarily due to fewer shares of Nexstar common stock repurchased in the current year, or a decrease in stock buybacks of $69 million and lower cash paid for shares withheld for taxes of $14 million, offset in part by a $17 million decrease in contribution from noncontrolling interests and a $14 million increase in common stock dividends paid.
Current wording
Net cash flows used in financing activities increased by $1 million during the nine months ended September 30, 2024, compared to the same period in 2023. This was primarily due to the prepayment of Term Loan B of $54 million, a $28 million decrease in contributions from noncontrolling interests and a $22 million increase in common stock dividends paid, offset in part by a decrease in stock buybacks of $86 million and lower cash paid for shares withheld for taxes of $16 million.
Previous wording
On July 26, 2024, Nexstar announced that its Board of Directors increased its share repurchase authorization by $1.5 billion. From July 1, 2024 to August 7, 2024, we repurchased 266,014 shares of our common stock for $46 million, funded by cash on hand. As of the date of filing this Quarterly Report on Form 10-Q, the remaining available amount under the share repurchase authorization was $1.9 billion.
Current wording
From October 1, 2024 to November 7, 2024, we repurchased 458,261 shares of our common stock for $78 million, funded by cash on hand. As of the date of filing this Quarterly Report on Form 10-Q, the remaining available amount under the share repurchase authorization was $1.7 billion.
Previous wording
On July 26, 2024, Nexstar’s Board of Directors declared a quarterly cash dividend of $1.69 per share of Nexstar’s common stock. The dividend is payable on August 23, 2024 to stockholders of record on August 9, 2024.
Current wording
On November 1, 2024, Nexstar’s Board of Directors declared a quarterly cash dividend of $1.69 per share of its common stock. The dividend is payable on November 29, 2024 to stockholders of record on November 15, 2024.
Previous wording
As of June 30, 2024, the Company had total outstanding debt of $6.781 billion, net of unamortized financing costs, discounts and premium, which represented 74.9% of the Company’s combined capitalization. The Company’s high level of debt requires that a substantial portion of cash flow be dedicated to pay principal and interest on debt, which reduces the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes.
Current wording
As of September 30, 2024, the Company had total outstanding debt of $6.7 billion, net of unamortized financing costs, discounts and premium, which represented 75.1% of the Company’s combined capitalization. The Company’s high level of debt requires that a substantial portion of cash flow be dedicated to pay principal and interest on debt, which reduces the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes.
Previous wording
Based on covenant calculations as of June 30, 2024, all of the $531 million and $14 million in unused revolving loan commitments under the respective Nexstar and Mission senior secured credit facilities were available for borrowing.
Current wording
Based on covenant calculations as of September 30, 2024, all of the $532 million and $14 million in unused revolving loan commitments under the respective Nexstar and Mission senior secured credit facilities were available for borrowing.
Previous wording
Our credit agreement contains a covenant which requires us to comply with a maximum consolidated first lien net leverage ratio of 4.25 to 1.00. The financial covenant, which is formally calculated on a quarterly basis, is based on the Company’s combined results, excluding the operating results of The CW, which Nexstar designated as an unrestricted subsidiary under its credit agreements and indentures. The Mission amended credit agreement does not contain financial covenant ratio requirements but does provide for default in the event we do not comply with all covenants contained in our credit agreement. As of June 30, 2024, we were in compliance with our financial covenant. We believe the Company will be able to maintain compliance with all covenants contained in the credit agreements governing its senior secured facilities and the indentures governing Nexstar’s 5.625% Notes, due July 2027 and Nexstar’s 4.75% Notes, due November 2028 for a period of at least the next 12 months as of the filing date of this Quarterly Report on Form 10-Q.
Current wording
Our credit agreement contains a covenant which requires us to comply with a maximum consolidated first lien net leverage ratio of 4.25 to 1.00. The financial covenant, which is formally calculated on a quarterly basis, is based on the Company’s combined results, excluding the operating results of The CW, which Nexstar designated as an unrestricted subsidiary under its credit agreement and indentures. The Mission amended credit agreement does not contain financial covenant ratio requirements but does provide for default in the event we do not comply with all covenants contained in our credit agreement. As of September 30, 2024, we were in compliance with our financial covenant. We believe the Company will be able to maintain compliance with all covenants contained in the credit agreements governing its senior secured facilities and the indentures governing Nexstar’s 5.625% Notes, due July 2027 and Nexstar’s 4.75% Notes, due November 2028 for a period of at least the next 12 months as of the filing date of this Quarterly Report on Form 10-Q.
Previous wording
Excludes Issuer’s equity investments of $856 million and $958 million as of June 30, 2024 and December 31, 2023, respectively, in unconsolidated investees. These unconsolidated investees do not guarantee the 4.75% Notes, due November 2028 and 5.625% Notes, due July 2027. For additional information on equity investments, refer to Note 4 to our Condensed Consolidated Financial Statements.
Current wording
Excludes Issuer’s equity investments of $869 million and $958 million as of September 30, 2024 and December 31, 2023, respectively, in unconsolidated investees. These unconsolidated investees do not guarantee the 4.75% Notes, due November 2028 and 5.625% Notes, due July 2027. For additional information on equity investments, refer to Note 5 to our Condensed Consolidated Financial Statements.