Nexstar reported its third-quarter 2023 earnings Wednesday, revealing TV ad revenue was down overall 23% for the July-September quarter. Meanwhile The CW network made quarter-over-quarter progress on its path to profitability by narrowing its losses to $60 million.
Wall Street forecast earnings per share (EPS) of $1.51 on $1.18 billion in revenue, according to analyst consensus data provided by Refinitiv. Nexstar reported diluted EPS of 70 cents on $1.13 billion in revenue.
“Third quarter financial results primarily reflect the year-over-year decline in cyclical political advertising as well as the distribution revenue impact related to our successful negotiations with a distribution partner,” Nexstar CEO Perry Sook said in a letter to shareholders. “We expect the favorable terms of new distribution agreements reached year-to-date, in 2022 and other upcoming renewals, to drive strong, high-margin distribution revenue growth. Our confidence in the strength and consistency of Nexstar’s business model and free cash flow generation is clearly highlighted by our active return of capital initiatives. During the third quarter and year-to-date, we allocated $199 million and $514 million, respectively, to repurchase shares, which we accelerated in September given the performance of our stock price. As a result, we reduced our share count to approximately 34.2 million shares as of September 30, 2023, marking a 25% reduction in our shares outstanding since the commencement of our share repurchase strategy in December 2019. We have ample capacity to continue to create shareholder value through repurchases with over $700 million remaining on our current authorization.
“Broadcast stations have the most watched television content, and we remain undercompensated for that viewership. Without significant audience reach, the broadcast model remains the only and best way to maximize viewership – something that broadcast networks and sports organizations understand. We believe that recent changes in the television ecosystem brought on by the Charter/Disney agreement will have a further positive impact on our model by creating stability in our subscriber base and freeing up programming spend from derivative cable networks to be reallocated to premium content like ours. The terms of our recent distribution and affiliation agreements reflect this viewpoint and we are very pleased with the outcome.
“We continue to be bullish about Nexstar’s future and the many exciting, near- and long-term organic growth opportunities for our business. Looking forward, we expect the balance of 2023 and full year 2024 to benefit from recently renegotiated distribution contracts. In 2024 Nexstar will realize upside from presidential election year political advertising, reduced losses related to The CW Network and an improving economic environment. We have a clear set of objectives for creating the greatest long-term value for our shareholders and will continue to deploy cash in a manner that will deliver the highest returns.”
Nexstar stock closed Tuesday at $151.46 per share. The regular U.S. stock markets will reopen at 9:30 a.m. ET.
Sook and other Nexstar executives will host a conference call at 8:30 a.m. ET to discuss the quarter in greater detail.
More to come…
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