The rating on Nexstar Broadcasting Group Inc. reflects its high leverage from aggressive debt-financed acquisitions, the potential for additional station purchases that could limit credit profile improvement, advertising's vulnerability to economic cycles, and TV broadcasting's mature revenue growth prospects. These factors are only partially offset by the company's cash flow diversity from major-network-affiliated TV stations in midsize markets, broadcasting's good margin and discretionary cash flow potential, and station asset values. Nexstar owns and operates approximately 46 TV stations, reaching 7.4% of U.S. TV households. Strength in auto advertising, the largest ad category for TV broadcasters, will be a key determinant of performance in 2005, a nonelection year. Revenue comparisons are difficult this year because of the absence of sizable political
