Here’s Where Nexstar Will Likely Need To Divest

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In 22 years, Nexstar Media Group has grown from a single station to one of the nation’s largest television companies, most recently through its merger acquisition with Media General, which closed in early 2017.


Now, Nexstar is poised to become the nation’s No. 1 owner of TV stations — and not Sinclair Broadcast Group, thanks to its blockbuster merger with Tribune Media formally announced Monday morning.

Here’s what a combined Nexstar-Tribune may look like.

With the purchase of Scranton, Pa.-based TV station WYOU in 1996, broadcast industry veteran and current Nexstar Chairman, President and CEO Perry A. Sook founded Nexstar.

As of today, the company owns, operates, programs or provides sales and other services to 174 full-power television stations and related digital multicast signals reaching 100 markets  — or nearly 39% of all U.S. television households.

That is key to understanding how Nexstar will handle necessary divestments designed to win regulatory approval of its Tribune merger plan.

Growing to this level involved several key transactions, including the purchase of TV stations from Quorum Broadcasting. This nearly doubled the size of Nexstar, and led the company to go public.

At $13.78, NXST began its trading life on Nasdaq in November 2003. For nine years, Nexstar languished, with a mediocre performance on Wall Street the highlight of this time. By July 2006, Nexstar shares dipped to $4.10 a share. Exactly 10 years ago, Nexstar was close to 51 cents a share.

Like many, Nexstar survived the Great Recession, and by November 2012 shares had grown to $9. Then, a massive growth spurt began — and has yet to stop.

Now, with word of the Tribune merger, Nexstar is closing in on $90 a share, and its 1-year target estimate of $91.82.

At the Closing Bell on Monday, NXST was up 6.9%, to $88.32. Volume was 2.31 million shares, compared to average trading volume of 532,465 shares.

A MAP TO THE TOP

Nexstar’s current station roster illustrates how the company presently looks, and where it is strongest. This includes its home state of Texas, the South, New York and New England, and a sizable portion of the Midwest. That said, Nexstar enjoys ownership of stations in Portland, Ore.; Las Vegas; San Francisco; Phoenix; Fresno; and Bakersfield.

With Tribune, it gets so much more.

In Illinois, Nexstar holdings include stations in Rockford, Peoria, Springfield and the Quad Cities, which include Moline. Now, it is getting one of the crown jewels of Tribune, WGN-9 in Chicago.

In New York, Nexstar has a big presence upstate, with ownership of FOX and ABC affiliates in Albany; ABC and NBC affiliates in Binghamton; ABC and FOX affiliates in Utica-Rome; ABC affiliate WSYR-TV in Syracuse; CBS affiliates in Buffalo and Rochester; the NBC affiliate in Elmira-Corning; the ABC and FOX affiliates in Plattsburgh; and the ABC affiliate in Watertown.

With Tribune, it gains big local news provider WPIX-11, a top affiliate of The CW Network.

NEXSTAR TODAY, PRE-TRIBUNE

Tribune owns a total of 42 O&O TV stations, as well as the MVPD-distributed WGN America and News/Talk WGN-AM 720 in Chicago, which will presumably be retained by Nexstar, at least in the short term.

Tribune Broadcasting, the division of Tribune Media in which its broadcast assets are housed, also has a 31% ownership stake in TV Food Network.

The combined entity “will be one of the nation’s leading providers of local news, entertainment, sports, lifestyle and network programming through its broadcast and digital media platforms with pro-forma annual revenue of approximately $4.6 billion (2018/2019 average) and pro-forma adjusted EBITDA of approximately $1.7 billion (2018/2019 average),” the companies said Monday (12/3).

With 216 combined, pre-divestiture full power, owned or serviced, television stations in 118 markets and rapidly growing digital media operations, Nexstar says it will “continue its commitment to localism and innovation and offer superior engagement across all devices, including large-scale reach to U.S. television households and online users.”

A look at Tribune’s roster of TV stations confirms that Nexstar will gain entry to several key markets, including New York, Chicago, Los Angeles, Philadelphia, and Dallas-Fort Worth.

But, the biggest questions involve Norfolk and Indianapolis. There, Nexstar already owns The CW Network affiliate WISH-8 and MyNetwork TV affiliate WNDY-23. Tribune’s assets in the markets are comprised of FOX affiliate WXIN-59 and CBS affiliate WTTV-4.

The Tidewater region sees Shared Services partner Dreamcatcher Communications operate for Tribune WTKR-3 and WGNT-27. Will Nexstar be able to take on a SSA agreement for those stations, as it already owns NBC affiliate WAVY-10 and WVBT-43, the FOX affiliate?

In Hartford-New Haven, questions will arise regarding Tribune’s ownership of FOX affiliate WTIC-61 as Nexstar owns heritage ABC outlet WTNH-8 and MyNetworkTV affiliate WCTX-39.

For viewers in Salt Lake City, an ownership change could put in question the future of KUCW-30, the CW Network affiliate presently owned by Nexstar. It already has a duopoly here, with ABC affiliate KTVX-4 and is poised to gain from Tribune the market’s FOX affiliate, KSTU-13.

Grand Rapids also presents a quandary, as Tribune’s FOX affiliated WXMI-17 will need to be sold or kept at the expense of Nexstar’s ABC WOTV-41 and NBC WOOD-8; a Class A LPTV station owned by Nexstar in this market is the CW Network affiliate.

Memphis is home to WREG-3, a Tribune property, while Nexstar owns The CW Network-affiliated WLMT-30 and ABC affiliated WATN-24. One of these properties will need to be divested.

Meanwhile, it could have a duopoly in Washington, D.C., where Tribune owns WDCW-50 and Nexstar has a market presence through Hagerstown, Md.-based WDVM-25; and in Portland, where Tribune owns KRCM-32, The CW Network affiliate, and Nexstar owns successful CBS affiliate KOIN-6. 

Harrisburg, Pa., also presents a duopoly situation.

Meanwhile, the small market of Davenport, Iowa-Moline, Illinois — the Quad Cities — will see Tribune’s WQAD-8 paired with three Nexstar properties: CBS affiliate WHBF-4, The CW Network KGCW-26 and FOX affiliate KLJB-18.

And, in Huntsville, Ala., WHNT-19 is a Tribune station that could be kept or sold, as Nexstar owns WZDX-54 and WHDF-15.

Des Moines also presents questions for Nexstar, as it is acquiring from Tribune a big NBC  affiliate, WHO-13. Nexstar already owns ABC affiliated WOI-5 and KCWI-23, the CW Network affiliate.

In Richmond, WTVR-6 is Tribune’s CBS affiliate. The market already sees Nexstar owning ABC affiliate WRIC-8.

Lastly, Tribune-owned WNEP-16 is set to become a Nexstar station in the market where the company began some 22 years ago. Or, it could be sold: Nexstar’s first station, CBS affiliate WYOU-22, is paired with NBC affiliated WBRE-28 in Scranton-Wilkes Barre.