Nexstar filled political revenue gap in Q3


Q3 net revenues were up 2.3% for Nexstar Broadcasting Group to $74.8 million. That’s not an adjusted number, as the company managed to replace $5 million of political advertising that didn’t repeat in this election off-year. And CEO Perry Sook says Q4 is looking much the same – with even better days ahead in 2012.

The Q3 results do include the addition of WFRV-TV (CBS) Green Bay, WI and WJMN-TV (CBS) Marquette, MI and some network affiliation changes. If you exclude those events, the company said core revenues (excluding political) were up 3% and total revenues were down 1%.

Nexstar booked $986K in management fee revenue in Q3 from running the Four Points Media stations. That revenue stream will go away when Sinclair closes its deal to buy those stations early next year – but not before Nexstar receives more payments for hitting cash flow targets. Sook told analysts he’s already replacing that lost revenue with the increased fees in a new retransmission consent deal he’s wrapping up with one of Nexstar’s five largest MVPDs. Oh, and he recently made a bid to manage another TV group.

As for his own group, Sook said there would be no comment on the ongoing process to examine strategic alternatives for Nexstar, including a possible sale of the company. Sook did say later that several parties have signed confidentiality agreements and noted that the size of the company’s portfolio, 75 stations in 36 markets, makes for a time-consuming process. Using a baseball analogy, he said the game is now in the middle innings, but he declined to forecast a timeline for completion.

Back to the Q3 results:

Local ad revenues, excluding political, were up 3.9% to $43.3 million. National rose 9% to $16.3 million. Thus, core was up 5.3% to $59.6 million.

Political didn’t go away completely, with off-year elections, issues and recalls in various states. So political declined 74.3% from $6.7 million in Q3 of 2010, but still brought in $1.7 million. Sook noted that political is already heating up in Q4, with the lowest-unit-rate rule kicking in for some early primary states next month.

Retrans fees rose 30.5% to just under $10 million and e-Media revenues gained 17.5% to $4.2 million.

RBR-TVBR observation: Selling advertising is really a different game outside the big markets, where even local dealer business is mostly placed by ad agencies on a CPM basis. As Perry Sook noted, Nexstar’s GMs and AEs are out meeting face-to-face with the dealers, having lunch, playing golf, etc. And he mentioned sending the station weatherman out to sign autographs in a showroom on Saturday morning. That’s the traditional sales approach in smaller markets that’s seldom seen in big cities. Thus, Nexstar’s local dealer business was up double digits in Q3, while auto in total rose only 4%. Just a day before we saw similar results from Barrington, in even smaller markets, where local dealer advertising was up over 17%.