Nexstar Media Group Posts Solid Q3 Results As Core Advertising Gains Offset 2020 Political Windfall
Top U.S. local TV station owner Nexstar Media Group reported solid third-quarter results, with distribution and core advertising gains offsetting record 2020 political ad spending.
The company’s total revenue gained 3.5% in the quarter compared with the same period a year ago, reaching $1.16 billion. Diluted earnings per share dipped to $3.90 from $4.08, but topped Wall Street analysts’ consensus expectations, as did revenue.
Distribution revenue climbed 13%, the company said. When the $120 million political surge from the year-ago quarter is excluded, station revenue rose 10%.
In a conference call with analysts to discuss the results, executives downplayed the impact of supply-chain issues on advertising, a scenario causing concern in other corners of the TV business. COO Tom Carter said the current fourth quarter ad revenue is pacing well and should improve over the third quarter. “It won’t be back to 2019 levels just yet,” he said, “but we continue to make progress.”
CEO Perry Sook was asked about the advent of streaming services operated by the same media companies who also own networks. (No specific names were mentioned, but that new crop includes Paramount+, Peacock and Disney+.) “We do take note of the fact that the networks are often competing with themselves in terms of their streaming offerings, and therefore competing with us,” Sook said. “That means less exclusivity in what we’re buying from the networks. That should come at an impact to the cost, we believe.”
Nexstar does have some advantages in terms of its affiliate mix, the CEO noted, with several larger-market CW and MyNetworkTV stations. Because the costs of programming are significantly lower there, those stations frequently exceed 50% profit margins.
NewsNation, formerly WGN America, is turning a profit, according to Nexstar. The company acquired it as part of its purchase of Tribune Media in 2019 and rebranded it last year. The recent acquisition of digital political brand The Hill was intended to accompany the 13 hours a day of news programming on NewsNation, which reaches 75 million households. “Over the last year alone, consumer awareness of NewsNation has doubled and while there is still much work to be done, we have great confidence in our long-term growth strategy for the network and the complementary opportunities related to our acquisition of The Hill,” Sook said in the company’s earnings release.
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