Nexstar (NXST) Q2 FY26 earnings call: guidance and Q&A

Will the FCC's repeal of the national broadcast station ownership cap affect the TEGNA litigation, and what is the updated view on political advertising?

Perry Sook believes the FCC cap repeal, while likely to face judicial review, is on firm legal footing and could marginally benefit the legal process by removing uncertainty, though the trial is more about antitrust. He stated that political advertising is performing ahead of internal expectations and will be very robust, but did not give new guidance. Mike Biard explained Nielsen's upcoming change for local impressions.

“I think on balance, there could be marginal benefit because it makes the unknown known from a regulatory perspective. but I don't know that it will have a ton of effect as we go through our process. It's more about antitrust than the national ownership cap.”

asked by Dan Kurnos · answered by Perry Sook

Is there potential for smaller M&A given the current legal situation, and what are the early impressions of TEGNA's operations?

Perry Sook indicated that portfolio optimization and smaller M&A (swaps) are possible after the TEGNA legal situation is resolved, but they want to clear the decks first. He noted that impressions of TEGNA operations are based on diligence, as direct conversations with local operators are restricted by the injunction. TEGNA is performing at Nexstar's level, except for distribution revenue due to different contract terms.

“I think we want to clear the deck of the legal situation that we're in and have certainty on that. And then I think we will -- that will be kind of tap two of some of the things we'll do in addition to looking at other M&A in the broadcast space and elsewhere.”

asked by Benjamin Soff · answered by Perry Sook

How do advertising trends differ between local news and sports investments, and what is the competitive view for local news within Nexstar's markets?

Lee Gliha explained that national network businesses (CW, NewsNation) are doing well due to ratings growth from sports investments and NewsNation's traction. Local TV advertising faces competitive pressure from CTV and digital, but local digital business is growing strongly. Perry Sook stated that Nexstar differentiates local news products, allowing different editorial points of view even in co-located newsrooms, to serve diverse community needs.

“this is a local service business, and it works best when the individual streams are allowed to individually serve the communities and constituencies where they have been able to find the most traction.”

asked by Patrick Sholl · answered by Perry Sook

What are the benefits of moving affiliations to CW, and what is the game plan for free cash flow allocation for the next 18 months?

Mike Biard highlighted that owning CW's intellectual property provides control over content, rights, and distribution flexibility across all platforms, unlike big 4 affiliations. He also noted the distribution benefits for the broadcast business. Lee Gliha stated that the first priority is debt reduction, aiming to return to pre-transaction leverage by 2028, and stock repurchases will be considered based on stock price and balance sheet position after deleveraging.

“With respect to the CW, we have continue to sort of mine benefits from the fact that we own the programming from top to bottom. In a world where intellectual property is kind of the coin of the realm and allows you to take that content to every platform and every device, the flexibility to be able to control our own destiny in terms of the rights that we acquire, what we pay for those rights, what we pay to the network for those rights and then furthermore, the distribution flexibility where we can monetize that across every platform and every device, whether it's mobile or streaming or what have you.”

asked by Craig Huber · answered by Michael Biard

How is core advertising trending in Q3, and how does Nexstar balance confidence in the TEGNA case with the costs and potential for an out-of-court solution?

Lee Gliha clarified that nonpolitical advertising (which includes core) is expected to decline mid-single digits in Q3, a slight improvement from Q2's 5.8% decline. Perry Sook expressed extreme confidence in prevailing in the TEGNA litigation based on facts and law. He acknowledged the costs and delays but noted that an out-of-court settlement is possible, though Nexstar is not under pressure due to the acquisition already being closed. He also commented on the broader implications of increased state-level antitrust scrutiny.

“I think that -- and anything could be possible to -- we'll see how the -- our appeal on the hold separate order plays out. We'll see how our discussions and negotiations go along the way. Is it possible there could be an out-of-court settlement? I suppose so. But we feel supremely confident in our legal position.”

asked by Aaron Watts · answered by Perry Sook