The rating on Nexstar Broadcasting Group Inc. reflects its high leverage from aggressive debt-financed acquisitions, relatively weak EBITDA margin and conversion of EBITDA into discretionary cash flow compared with peers, advertising's vulnerability to economic downturns, and TV broadcasting's mature revenue growth prospects. These factors are only partially offset by Nexstar's cash flow diversity from major-network-affiliated TV stations in midsize markets, broadcasting's good margin and discretionary cash flow potential, and strong station asset values. Nexstar operates 49 TV stations, reaching 8.5% of U.S. TV households. Revenue comparisons in nonelection years are difficult because of large swings in political advertising. Nexstar's NBC- and CBS-affiliated stations contribute a majority of the company's broadcast cash flow. The company's local news programs are rated No.
