Nexstar Q1 2020 Earnings Report
Key Takeaways
Nexstar Media Group reported a record first quarter with a 74.2% increase in net revenue to $1.1 billion. The company experienced strong growth in political advertising revenue and distribution revenue. However, due to the uncertainty caused by COVID-19, Nexstar withdrew its free cash flow guidance for the 2020/2021 cycle.
Net revenue increased by 74.2% to $1.1 billion, marking the first billion-dollar quarter.
Political advertising revenue rose significantly due to active spending by Presidential candidates.
Distribution revenue increased by 75.1% to $549.7 million due to the inclusion of WGN America and recent distribution agreement renewals.
The company allocated $457 million towards debt reduction, lowering the first lien net leverage ratio to 3.04x.
Nexstar
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Nexstar Revenue by Segment
Forward Guidance
Due to the uncertainty caused by COVID-19, Nexstar withdrew its free cash flow guidance for the 2020/2021 cycle.
Positive Outlook
- Over 50% of annual revenue is expected to be derived from contractual distribution fee and political advertising revenue.
- Nexstar has solid visibility in terms of contractual distribution economics through December 2022.
- The company completed new multi-year retransmission consent agreements representing approximately 70% of subscribers at year-end 2019.
- New long-term network affiliation contracts with CBS, FOX and NBC.
- Nexstar has a strong balance sheet including $434 million in cash at March 31, with access to an additional $140 million under our revolving credit facility.
Challenges Ahead
- The broadcast industry experienced a rapid change in market conditions due to COVID-19.
- A significant decline in commercial advertising revenue in the last three weeks of March and into the second quarter.
- The precise depth and duration of COVID-19’s impact on operations is uncertain.
- The company withdrew its free cash flow guidance for the 2020/2021 cycle.
- Anticipated challenges in the coming months.
Revenue & Expenses
Visualization of income flow from segment revenue to net income