Nexstar Media Group Inc.

Overview Key strengths Key risks The company's reach of approximately 68% of U.S. households positions it as the largest affiliate television station group in the country. Shareholder-friendly activities are likely to keep leverage in the mid-3x area over the next two years. Distribution revenue, currently 52% of total revenue, provides revenue stability. Operating performance is susceptible to economic cyclicality as 34% of revenue comes from core advertising. Solid free operating cash flow (FOCF) of about $1 billion annually. Uncertainty regarding the effect of secular shifts in advertising and subscriber revenue. Nexstar?s leverage (calculated on an average trailing-eight-quarters basis) was 3.4x as of June 30, 2023, and we expect it will remain in the mid-3x area over the next two years

...Shareholder friendly activities will likely keep Nexstar Media Group Inc.'s leverage in the mid-3x area over the next two years. Nexstar's leverage (calculated on an average trailing- eight-quarters basis) was 3.4x as of June 30, 2023, and we expect it will remain in the mid-3x area over the next two years despite expected operating losses from The CW television broadcast network (acquired in October 2022). Absent acquisition opportunities, we believe Nexstar will continue to return most of FOCF to shareholders through dividends and share repurchases. However, given the company's financial policy, we would not expect it to take on incremental debt to fund share buybacks. While we believe Nexstar could acquire additional digital businesses given its past acquisitions of The Hill and BestReviews, we believe acquisitions would likely be limited in size. Additionally, we believe the company could quickly reduce leverage if it took on additional debt to fund acquisitions, with about $2 billion...

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