Nexstar Media eyeing 'tuck-in acquisitions' as it issues $100M share buyback

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Nexstar Media CEO Perry Sook said the newly expanded repurchase program shows that his company is doing well at growing free cash flow and building value for shareholders.

Nexstar Media is on the hunt for small acquisitions as it gets ready to buy back another $100 million of its Class A common stock.

Nexstar Media CEO Perry Sook said the newly expanded repurchase program shows that his company is doing well at growing free cash flow and building value for shareholders.

“With the operating momentum across our business Nexstar remains on track to meet our target for average annual free cash flow in the 2017/2018 cycle of approximately $565 million (before the impact of $47.7 million of one-time transaction expenses),” said Sook in a statement. “As such, we have the financial flexibility to take a range of actions to enhance shareholder value including our return of capital initiatives through the quarterly cash dividend and share repurchases, leverage reduction and pursuing opportunistic, accretive tuck-in acquisitions.”

Sook’s comments seem to suggest that Nexstar is looking to snap up stations and smaller groups here and there rather than pursue another large-scale merger like the Media General deal it closed earlier this year.

RELATED: Nexstar to benefit most when FCC reinstates UHF discount, analyst says

With the FCC still pursuing a reinstatement of the UHF discount, which allows station owners to count UHF stations at 50% toward the national ownership cap, Nexstar could be one of the broadcast groups best positioned to benefit from the potential M&A boon from more relaxed rules.

Jefferies’ John Janedis is anticipating a new wave of broadcast TV consolidation, and he sees Nexstar riding the crest.

“While the M&A landscape could take many forms (likely dictated by changes made to ownership rules), we believe that NXST is well positioned to benefit. We estimate that an incremental 10-25% reach would be ~20-40% accretive to '17/18 ests (w/ further upside to LT ests given additional operating synergies). While shares have moved in anticipation of M&A, the incremental benefit would still translate to approximately 20-35% upside for the stock,” wrote Janedis in a research note.

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