S&P keeps Nexstar on CreditWatch


There’s been no public movement on Nexstar Broadcasting Group’s effort to sell itself, but Standard & Poor’s says the TV company will remain on its CreditWatch list. So, S&P will wait with the rest of us to see what happens – or doesn’t, since a previous sale attempt in 2007 was eventually abandoned.

“Although the company has not made a decision to pursue any specific transaction, the situation results in considerable uncertainty regarding Nexstar’s business and financial strategy,” said S&P credit analyst Daniel Haines.

S&P put Nexstar on its CreditWatch list with negative implications for the company’s debt ratings right after the sale effort was made public last July.

“We believe that a sale of the company, if pursued, could re-leverage the  balance sheet and cause deterioration in Nexstar’s financial risk profile, especially if the new owner is a financial investor. The company’s loss of three Fox affiliation agreements in 2011 and the reduced profit potential of such stations as they operate as independent stations could hamper the sale process, in our view. The discontinuation of the company’s management services agreement with Four Points Media Group Holdings LLC as a result of Four Points’ sale to Sinclair Broadcast Group Inc. will also lower Nexstar’s revenue and EBITDA. The acquisition of three stations in the second half of 2011 somewhat mitigates these factors,” said the S&P update.

“Even if a sale of the company doesn’t occur, we believe there is a chance that Nexstar’s financial investors could seek an alternate path to liquidity through dividend distributions. ABRY Partners LLC and its affiliated funds own a majority of Nexstar’s shares, controlling about 88% of the voting power. In addition, ABRY holds five of the company’s 10 board seats,” the credit ratings agency noted.

RBR-TVBR observation: Stay tuned. Interest in TV transactions has certainly picked up lately. However, Nexstar is a pretty big investment for someone to make.