Nexstar Falls Just Below Estimates in Q2 With $1.24 Billion in Revenue

The largest TV station owner in the U.S. reported diluted earnings of $2.88 per share as it continues to revamp The CW

Nexstar Earnings Graphic (Photo Credit: TheWrap)
Nexstar Earnings Graphic (Photo Credit: TheWrap)

Nexstar Media Group missed Wall Street’s earnings expectations for its second quarter on Tuesday after reporting net income of $75 million, or diluted earnings of approximately $2.64 per share, on revenue of $1.24 billion. Analysts surveyed by Zacks Investment Research were expecting earnings of $2.88 per share on revenue of $1.25 billion.

Operating income stood at $179 million. The second quarter also brought about a consolidated adjusted EBITDA of $331 million and ended with attributable free cash flow of $100 million. That adjusted EBITDA included losses related to The CW Network as well as the impact of lessened political advertising revenue and increased news expenses related to NewsNation’s programming expansion.

If one were to exclude The CW — a network that Nexstar has been frank about its unprofitability — second quarter adjusted EBITDA would be $405 million.

In its second quarter, 67% of Nexstar’s net revenue was generated by distribution, digital and other revenue sources. Distribution revenue, which accounted for approximately $696 million, offset declines the company saw in political advertising and core advertising revenue. If political advertising revenue were to be excluded, net revenue increased 6.3% year-over-year in this second quarter.

National advertising fell to approximately $404 million, a decrease of 2.2% year-over-year. Political advertising fell to $9 million compared to 2022’s $87 million.

Digital revenue increased 11.4% year-over-year to approximately $98 million, largely from The CW, in which Nexstar acquired a 75% stake in 2022.

On Monday, the company extended The CW network president Dennis Miller’s contract through 2027. Increases in Nexstar’s local digital advertising revenue and agency services also contributed to the rise in digital growth.

“Looking forward, we expect the balance of 2023 will continue to reflect our ability to outperform the overall advertising market and benefit from renegotiated distribution contracts representing more than half of our subscribers at the end of 2022, partially offset by the ongoing impact of negotiations with certain distribution partners,” Perry A. Sook, chairman and CEO of Nexstar Media Group said in the earnings report. 

“We are even more excited about 2024 as Nexstar will realize upside from presidential election year political advertising, additional distribution contract renewals this year, a slowing of losses related to The CW Network, as well as expectations for a declining interest rate environment and a recovering economy. Given Nexstar’s exciting growth initiatives, robust free cash flow generation, solid capital returns to shareholders and our modest leverage, we remain well positioned to deliver enhanced value to shareholders,” Sook added.

Sook also highlighted The CW’s new focus on live sports as a factor that is “expected to accelerate viewership and revenue growth” for the network. Beginning in September, The CW will air select ACC football and basketball games as part of its new sports programming agreement. The network, which currently has the broadcast rights to LIV Golf, will also air the NASCAR Xfinity Series beginning in 2025.

Nexstar still has a long way to go in its goal to make the network profitable by 2025. A schedule revamp involved cutting several young adult series that used to be the network’s bread and butter, and the company conducted layoffs shortly after the acquisition and again in the spring.

The company also highlighted the evolution of its cable news network,  NewsNation. During the 2023 second quarter, NewsNation became a 24/5 news network and expanded its programming, which included launching its political ensemble program “The Hill.”

In addition to owning a majority of The CW, Nexstar operates stations for affiliates Mission Broadcasting and Vaughan Media. It also owns Antenna TV and Rewind TV, two terrestrial television networks dedicated to classic television, and cable news and entertainment network NewsNation. Nexstar also holds a partial stake in Food Network and Cooking Channel.

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