Nexstar Media Group Inc at Bank of America Media, Communications and Entertainment Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : And I'd love to get started and maybe start with typical kind of high-level question to frame the Nexstar story and familiarize some of the investors here, but pay TV business broadly top of mind for a lot of investors, especially at this conference. You've been very clear about your view regarding the continued importance of broadcast in the television ecosystem, where broadcasting sits. Could you just elaborate a little bit on your viewpoint of Nexstar's place in the world, broadcast televisions placed in the world and maybe some common misperceptions that we all have about the business. I've heard you speak in the past, and I think we'd all benefit from hereon.

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : Well, why don't I jump because as we talked about putting pieces together, I'll sort of jump to one of my later question regarding M&A and just kind of the world right now of pay TV. Obviously, some major companies are going through current potential transformations. There could be an acquisition, there could linear cable networks that are for sale or sought to be spun or something like that. Where do you guys stand? Is Nexstar complete? Are you kind of strategically complete and really love the hand you have. Are there interesting assets? And what would be your sort of evaluation framework where one of these I'm thinking linear cable networks, but could there be other stations? And I know there's regulatory limitations on [certain].

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : And you talk about and I'd love to because you acquired the CW in 2022. Are there assets similar to that, that would be interesting? Because I understand the broadcast network/station regulatory hurdle. Is there a limitation on buying a classic cable network?

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : Great. So just switching gears a little bit, but the direct-to-consumer ecosystem has obviously been evolving quickly over the last few years, the launch of Disney+, the changing mood in the market subs at all costs to focus on profit. The last year, we've seen a lot of those services raise prices. We've seen subs stall out in many cases. So what does that mean to the value of your viewership, the value of subscription, if you will, the distribution revenues? What kind of angles are you thinking about this might create for your business? And it could just be highlighting that you're undervalued or underpaid. But what needs to happen on the pay TV side to kind of match some of those changes on DTC?

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : Is one of the complications because I'm just thinking about what's going on with some of the cable broadband companies that are having -- they had a pretty rough year a charter and others. Is it create complexity in that you need to collect from the consumer, if you will, a fair number and the cable company needed to collect that charter is under pressure at its broadband business that it may be more low raise prices on the consumer pass along these. So I'm just wondering if it creates an incremental tension and you're trying to get paid those higher affiliate fees when the collector is under pressure in its own business.

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : That's great. And that brings me to the next point, which is one of the most premier forms of content air, which is sports. And sports are a huge part of the overall media ecosystem. There's been lots of rights deals, the NBA renewal and the WNBA massive success in college women's basketball, massive success. So I assume you're very bullish on the value of sports overall and what it means to you as a company. How is this -- can you just like articulate a little bit to the audience here, the value, the reach you provide to the leagues. And I think it was Roger Goodell made the comment, you might have quoted it on an earnings call, I heard about the value of the reach that networks provide that sometimes the streaming services can't. And I think right before I came over here, there's talks about Amazon and talks to sign a deal with Valley Sports, so to basically pick up the rights to some of the regional sports networks. So can you talk a little bit about the value to your company, sports, the opportunity in a few years and maybe how we've in the streaming players.

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : You were referencing CW specifically when you said shifting to close to 70% sports at some point. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 6:00PM, NXST.OQ - Nexstar Media Group Inc at Bank of America Media, Communications and Entertainment Conference

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst :

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : And the more aggressive on the surface moves by Amazon and some others, but I'm just -- let's focus on Amazon into sports rights. Does it have any -- what's your read on how that impacts the ecosystem over the next few years other than it's another venue, they obviously are going from more premier games.

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : Switching gears a little. But can you provide an update on ATSC 3.0, this technology and maybe even -- because I always view there might be people tuning in who are not as familiar with the story, just a little bit of one or two line around the technology. What's the latest thinking on timing impact your company had brought.

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : Yes, absolutely. And now is ATSC -- I'm just thinking we had Trade Desk here yesterday, and obviously, their specialty is programmatic advertising and connected TV advertising is a big opportunity for them. Is ATSC 3.0 is that an unlock to help broadcast stations and somewhat, what I call traditional providers get towards more programmatic advertising there already.

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : Great. Now just turning quickly to the advertising market. And if you could frame how much of revenue recently comes from advertising versus distribution? I think distribution is more than [55%] or something.

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : Yes. So advertising for your company and many has become a smaller percentage, but still significant. What's the ad market like right now on the national and local side? What's the mood -- and then we can get into talking a little bit about the impact of political. We're obviously heading into a political cycle, an important one. So would love to hear about how that is expected to shape up and impact your business?

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : And you've talked about and people who follow this industry know the notion and the concept of crowding of other dollars. Can you briefly explain that because I think people just see there's an avalanche of political dollars coming. That seems bullish. That seems positive. But just the mechanics of how does political spending crowd out? It's on the rate or CPM level? Or how does that work?

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : All right. Great. NewsNation has been a success as continue to become more prevalent in mainstream? How is it performing? Can you just give us an update on NewsNation?

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : Right. And are you leveraging your station network, local news, facilities, talent programming and NewsNation? Like is there some cross-pollination where you're able to get synergies from using local content --

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : That's great. Now I wanted to talk a little bit about the financial model because have had an attractive profile, both high margins, free cash flow generation, return of capital. But in tech, there's been a big raw movement of cost discipline over the last two years in bigger companies, Google and Meta. But you guys have always run your company is pretty lean. So can you just talk a little bit about the philosophy of OpEx and just running the stations in a profitable way, keeping an eye on margins. And then we could talk a little bit about the real -- the payoff, the free cash flow generation, the buybacks and the great story here.

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : This great net result is this free cash flow generation. And how do you think about capital allocation in the context of dividends, buybacks, M&A opportunities that kind of --

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : And remind me, what is your net leverage ratio right now? And have articulated a target that --

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : And just pivoting quickly back to the advertising environment. You said national advertising is pretty tough branding down. Some people might hear this, and it's not -- of course, it's not an Nexstar dynamic. There's many companies saying that in the TV ecosystem. What's your view on that? Is that recoverable? Is it cyclical? Is that just a structural hey, branding isn't -- because it's somewhat surprising, given you do have sports, you do have a tremendous amount of reach that national advertising is still so sluggish. So just any thoughts on, I don't know, the multiyear outlook for international advertising and TV.

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : Great point. Now you've met with investors this week. You just recently had earnings. You're running out of pure-play comps in the market. Some of them are just less successful, more debt written, things like that. And then even in the public -- or the larger media companies, some of them are going away. So how should we think about what your business is worth and frame it. I mean I think it's a more simple business as one of the pitches. It's a lot more simple to understand than many of the conglomerates in media. But yes, how would you like us to think about your business, who are the right peers? Or is it not about who the peers aren't. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 6:00PM, NXST.OQ - Nexstar Media Group Inc at Bank of America Media, Communications and Entertainment Conference

Question: Brian Fenske - Bank of America Merrill Lynch - Analyst : And you guys did some of the most incredible M&A and opportunistic M&A and media has ever seen eight years ago when it began and have thus when everyone else on the big guys are either throwing money away on streaming or doing bad deals, you have not and you bought back a lot of stock. So you've zigged when others have zagged in the media industry, and I think you do deserve a lot of credit for that.