Top TV Station Owner Nexstar Beats Q1 Estimates, Says It Has Financial Structure To Weather Coronavirus

Nexstar Media Group, the No. 1 owner of local TV stations in the U.S., topped Wall Street’s first-quarter forecasts as advertising momentum before the coronavirus carried the company to a 177% surge in net income.

Total revenue in the quarter ending March 31 was $1.09 billion, edging consensus estimates for $1.07 billion. Diluted earnings per share of $3.30 easily beat analysts’ expectation for $2.86.

Advertising revenue shot up 87%, boosted by political spending, to reach $472.7 million.

Local stations have generally experienced what national TV networks have during the pandemic: sizable increases in tune-in as viewers seek information, but also a pull-back by many advertisers. Accordingly, the company has withdrawn guidance on free cash flow for 2020-21.

CEO Perry Sook said in the earnings release that advertising overall makes up about 40% of annual revenue. Nevertheless, he said he is “confident in our liquidity position and ability to service our debt through these challenging times and do not anticipate any liquidity or covenant issues as we move through 2020.”

Nexstar has also sealed carriage deals representing 70% of its footprint as well as new long-term affiliate deals with CBS, Fox and NBC, Sook said.

Last fall, Texas-based Nexstar closed a $4.1 billion deal to acquire Tribune Media, adding stations in major markets like New York, LA and Chicago to its portfolio. Tribune also brought cable assets, including a 31% stake in Discovery’s Food Network and general entertainment network WGNAmerica.

Nexstar said in its earnings release that it will proceed with its plans to launch a primetime national newscast, News Nation. Belt-tightening has begun, though, with operational expense reductions estimated at $40 million in the current quarter.

The pandemic “resulted in a significant decline in commercial advertising revenue in the last three weeks of March and into the second quarter,” CEO Perry Sook said in the company’s earnings release. The company is on track to meet its own target of $1.175 billion in average annual free cash flow. Even so, Sook said, it has withdrawn guidance because “the precise depth and duration of COVID-19’s impact on our operations is uncertain.”