Nexstar earns a positive review


Nexstar Broadcasting GroupWells Fargo’s Marci Ryvicker has taken a fresh look at Nexstar and chatted with its key execs and likes what she sees. The short story is that the television group is expected to outperform its sector.

WF spoke with CEO Perry Sook and CFO Tom Carter, and came away with a number of positive impressions.

For starters, Ryvicker noted that anywhere between $2.5B-$3B worth of television stations is either on the block or expected to be there soon, and there is every reason to believe that Nexstar will be one of the companies doing some serious tire-kicking.

However, it will only make acquisitions that fit strategically and at the right price point. She’s looking for an acquisition budget in the $300M-$500M range.

Another positive is a pick up in traditional advertising business. Q1 started out sluggishly, but that has not been the case for Q2, and heightened advertiser activity will naturally benefit Nexstar.

Ryvicker also notes that the company is well-positioned on both sides of the retransmission consent divide. It will have numerous opportunities to negotiate higher rates during the coming handful of years; meanwhile, she said 85% of its stations are locked into reverse compensation deals with their networks. The result – potential to grow income with little risk of growing expense, is a positive.

Finally, regardless of the outcome of the Aereo issue, the fact remains that Nexstar’s small market concentration leaves it largely outside the internet service’s footprint and thus with very little exposure to any negative financial effects.