Nexstar Media Group boasted strong third quarter financial results, primarily driven by political advertising and distribution revenues. Notably, the company this quarter completed its acquisition of The CW Network, becoming the network’s majority stakeholder.
Speaking on Tuesday morning’s earnings call, Nexstar CEO Perry Sook said The CW transaction will “solidify the company’s revenue opportunities as the largest CW affiliate group, diversifying our content outside of news.” The acquisition also establishes Nexstar as a participant in the AVOD space via The CW app.
Nexstar in its second quarter earnings report outlined plans to bring The CW to profitability by 2025. CFO Lee Ann Gliha said on Tuesday Nexstar aims to invest a “low nine-figure amount” over a three-year period.
When considering The CW’s current 2022-23 broadcast season commitments, Nexstar expects the network to generate just under $70 million in revenue for the fourth quarter, said Gliha.
Following the close of The CW transaction, Nexstar tapped Dennis Miller – previously a member of the company’s board of directors – to lead the network.
“We are confident in [Miller’s] ability and focus to improve The CW ratings, revenue and profitability,” Sook said. Nexstar is currently running a hiring spree for The CW, most recently naming Brad Schwartz as president of CW Entertainment and Beth Feldman as SVP of network communications.
Nexstar reported third quarter net revenue of $1.27 billion, with distribution revenue amounting to $641.7 million – up from $618.8 million in Q3 2021. Total TV advertising revenue increased from $445.1 million to $529 million year-over-year, with political ad sales making up $129.3 million of that revenue.
“We expect the fourth quarter to benefit from a continuation of strong political advertising trends while 2023 will see distribution revenue upside from renewals of agreements representing more than half of our subscribers,” Sook said in prepared remarks.
“Looking forward, we expect 2024 to benefit from another record year for political advertising due to the presidential election,” he added.
Sinclair similarly noted an upswing in political ads in its latest earnings report, expecting to generate up to $340 million in political ad revenue by year-end.
Sook also talked up Nexstar’s local advertising inventory, which makes up roughly 70% of the company’s core advertising. Not only does Nexstar partner with more than 1,500 local sellers, but its broadcast stations tout relationships with over 40,000 advertisers across Nexstar’s 116 local markets.
“On the local level, there is no one in the TV industry with greater sales resources and consumer reach than Nexstar,” Sook boasted. “This isn’t something the larger AVOD or streaming companies can easily replicate, as it requires both local scale and meaningful investments.”
In other distribution news, Nexstar and Verizon reached a new retransmission agreement late last month, after Fios customers faced a two-week channel blackout in 10 Nexstar markets.
Sook added Nexstar remains in “active negotiations” with the remainder of its distribution partners, with “slightly less than half of our total subscribers up for renewal before year-end.”