How Strong Was Political For Nexstar?

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Along with retransmission fees, political dollars played a strong role in Nexstar Media Group’s Q4 and FY2016 fiscal results. How big were they?


RBR + TVBR dived into the numbers, and retransmission fee revenue is clearly the leading catalyst for one of the nation’s biggest broadcast media companies.

In Q4, Nexstar saw political revenue of $60.03 million. For the year, political dollars topped $100 million, coming in at $108.54 million.

“During the fourth quarter, our inventory management and pricing strategies enabled us to maximize our share of election spending in our markets and exceed our full-year political advertising revenue guidance of $100 million by $8.5 million,” said Perry Sook, Chairman and President/CEO of Nexstar. “Fourth quarter television ad revenue inclusive of political advertising grew 30.3% and reflects a near eight-fold increase in year-over-year political revenue and, as anticipated, a low single-digit decline in core spot revenue compared to the 2015 period related to displacement of ad inventory.”

An expanded platform and a presence in states with high levels of political spending activity led Nexstar to see a Q4 political revenue rise by 69.7% when compared to Q4 2014. Even more, Q4 2016 political dollars increased 119.5% over Q4 2012, Sook notes.

Yet, while those dollars are no doubt appreciated by Nexstar, they pale in comparison to its retransmission fee revenue. In Q4, Nexstar collected some $100.32 million in retrans fees, up from $81.7 million in the year-ago period. For FY2016, retrans fee revenue climbed by 32%, to $394.04 million.

Without such strong improvements, Nexstar’s revenue excluding political may not be so robust. For Q4, gross revenue excluding political improved 2.9%, to $276.7 million.

“Reflecting the ongoing benefits of our revenue diversification strategies, total Q4 retransmission fee and digital media revenue represented 40.7% of 2016 fourth quarter net revenue, compared to 30.3% of total net revenues in 2014 fourth quarter, the last even-year political cycle,” Sook said. “We expect our long-term distribution revenue growth to continue, as in late 2016 we reached new distribution agreements with multichannel video programming distributors (MVPDs) covering approximately 10 million subscribers.”

No Spectrum Selection In Reverse Auction

Later in 2017, Nexstar is expected to receive an estimated $479 million of gross proceeds from the National Broadband Plan Spectrum Auction.

But, the company reveals that none of the spectrum Nexstar offered was selected during the auction process.

Why? “Prices available in the auction fell below the value we ascribed to it,” the company notes.

Based on these factors, the value of each CVR is estimated to be worth between $1.70 and $2.10 calculated by using the estimated gross proceeds, less estimated transaction expenses, repacking expenses and taxes.