Nexstar Media Group Q1 Earnings Call Highlights

Key Points

• TEGNA acquisition closed on March 19 but faces lawsuits from DIRECTV and multiple state attorneys general, and a court order requires TEGNA to be run and "held separate," limiting Nexstar's operational control and constraining forward guidance.
• Nexstar delivered record Q1 results with $1.4 billion in net revenue, $470 million of adjusted EBITDA and $420 million of adjusted free cash flow, while post-acquisition debt rose to $12.1 billion though leverage remains below covenant levels.
• Advertising benefited from political spending (combined Q1 political ads of about $78 million) while Nexstar’s networks are progressing—The CW aims for profitability by Q4 2026 and NewsNation posted strong primetime audience growth—supporting the company’s distribution and digital partnership strategy.

Nexstar Media Group NASDAQ: NXST reported first-quarter 2026 results that included 13 days of financial contribution from its newly acquired TEGNA assets, while management also detailed the unusual post-close legal and operational constraints now surrounding the transaction.

TEGNA acquisition closes, but litigation keeps operations separate

Founder, Chairman and CEO Perry Sook said the company “hit the ground running” in the first quarter, highlighted by the close of Nexstar’s “landmark acquisition of TEGNA” on March 19 following FCC and Department of Justice approval. Sook said Nexstar provided “more than 7 million pages of documentation” during the review and agreed to concessions, including increasing local news in nine markets, divesting stations in six markets within two years, and extending expiring retransmission agreements through Nov. 30.

Despite closing, Sook said DIRECTV, along with a number of state attorneys general, filed suit seeking to block the deal. He emphasized that Nexstar believes it will prevail, arguing the case centers on whether the transaction serves the public interest, including consumers and “the preservation of local journalism.”

Sook said Nexstar has expanded its legal team, naming Beth Wilkinson of Wilkinson Stekloff to lead trial and appellate efforts, supplementing antitrust counsel at Morrison Foerster. He outlined multiple proceedings underway, including an appeal of a preliminary injunction in the Ninth Circuit, a trial in the U.S. District Court for the Eastern District of California, and a separate challenge to the FCC approval pending in the D.C. Circuit. Sook noted the court denied a request for an emergency stay, and that Nexstar and the FCC were directed to file responses to a petition by May 11.

Chief Financial Officer Lee Ann Gliha said the company is in “an unprecedented place” because of the court order. She emphasized that Nexstar owns TEGNA as a subsidiary and can use excess cash flow for combined debt repayment, but the order requires Nexstar to “hold separate” TEGNA’s assets. As a result, TEGNA is operating as it did prior to the transaction, including under its own retransmission agreements, and is managed day-to-day by the TEGNA team rather than Nexstar. Gliha said that, given the variables, “forward-looking guidance will be limited.”

First-quarter financial results: $1.4 billion in revenue and $470 million of adjusted EBITDA

Management reported first-quarter net revenue of $1.4 billion, describing it as a record. President and COO Michael Biard said net revenue rose $162 million, or 13.1%, from the prior year, driven primarily by $106 million of revenue from TEGNA and higher advertising and distribution revenue from legacy Nexstar operations.

Gliha said first-quarter adjusted EBITDA was $470 million, representing a 33.7% margin and an $89 million increase from $381 million in the prior-year quarter. She said TEGNA operations accounted for $31 million of the year-over-year change, with the remainder “primarily” driven by the political cycle. Excluding TEGNA, she said legacy Nexstar generated $439 million of adjusted EBITDA.

Adjusted free cash flow was $420 million, up from $348 million a year earlier. Excluding TEGNA, Gliha said legacy Nexstar generated $400 million of adjusted free cash flow.

Distribution and advertising trends, including political tailwinds

Biard said first-quarter distribution revenue totaled $837 million, up $75 million, or 9.8%, year over year. The increase reflected $54 million from TEGNA and 2.8% higher legacy distribution revenue due to increased rates, MVPD subscriber growth, additional CW affiliations on some stations, and local Fox affiliates’ participation in the launch of Fox One—partly offset by MVPD subscriber attrition. On a combined basis assuming TEGNA was owned for the entire quarter, Biard said distribution revenue increased 1.6% year over year.

Biard said Nexstar was “feeling more optimistic” than its original plan for subscriber attrition, based on reported numbers and publicly reported distributor subscriber counts. However, he said the company does not expect a “material change” to the original distribution guidance previously provided for legacy Nexstar, noting the FCC commitment to offer MVPDs renewing before Nov. 30 an extension of current retransmission agreements through that date.

Advertising revenue was $548 million, up $88 million, or 19.1%, primarily due to $51 million of incremental TEGNA advertising revenue and higher political advertising. Excluding TEGNA, Biard said legacy Nexstar non-political advertising was “flattish” and in line with expectations, rising 0.4% as digital growth offset declines in non-political television advertising.

Biard listed top first-quarter advertising categories for legacy Nexstar as department and retail stores, attorneys, and gaming and sports betting, while the largest declines were in drugstores and medication, packaged goods, and radio/TV/newspaper/cable advertisers. He said there were no major category outliers.

On a combined basis, Biard said non-political advertising was up 1.2%, aided by TEGNA’s portfolio of NBC affiliations benefiting from NBC’s broadcast of the Super Bowl and Olympics in the first quarter. He added that combined digital advertising revenue increased at a mid-single-digit percentage, driven by strong local digital revenue, offset in part by continued declines at TEGNA’s Premion segment due primarily to the loss of a major customer in 2025.

For the second quarter, Biard said non-political advertising on an as-combined basis is expected to decline in the mid-single digits due to a weaker advertising environment. On the call, Gliha said she did not see a single category driving the softness, describing it as broadly distributed across categories. Sook added that several smaller factors were affecting results, including one large home improvement advertiser going “silent” for a period, and pharma advertising that “has not returned as of yet.”

Political advertising was a key contributor in the quarter. Biard said reported political advertising was $46 million, while on a combined basis political advertising in Q1 was $78 million, up 89% versus 2022 and 19% versus 2024, driven by spending in Texas, Illinois, California, Michigan, Georgia, and Maine. Citing AdImpact, Biard said industry-wide broadcast political spending was up 79% versus the comparable 2022 election cycle quarter and up 13% versus 2024.

The CW and NewsNation updates: profitability target and audience growth

Sook said Nexstar continued building The CW and NewsNation as national networks. He said The CW improved year-over-year profitability in the first quarter and is “well on its way” to achieving profitability by the fourth quarter of 2026.

Biard reiterated the profitability goal and said the company expects to improve full-year CW losses by more than 30%. He said the network faces near-term advertising headwinds related to Nielsen’s transition to big data measurement, but improved distribution from the 2025 affiliation renewal cycle is expected to more than offset those impacts.

Biard highlighted a multi-year broadcast partnership with the Mountain West Conference running through the 2030-2031 seasons, including 13 football games annually and 20 men’s and 15 women’s basketball games each season. He also said The CW added six Banana Ball games to its May and June schedule. With 148 additional hours of programming airing in 2026, Biard said nearly half of The CW schedule will be sports or sports-adjacent.

On performance, Biard said the NASCAR O’Reilly Auto Parts series on The CW delivered more than 1 million total viewers for each of its first 12 races in the 2026 season. He also said ACC men’s and women’s basketball concluded the 2025-2026 season with record viewership, with total audiences up 6% for men’s games and 26% for women’s.

Biard also discussed new distribution partnerships, including a deal with ESPN that will make the ESPN app and website the exclusive streaming home for all CW sports, and a Roku partnership that will bring CW entertainment programming to The Roku Channel for next-day streaming starting in the fall broadcast season. Biard framed these as an “evolution” of strategy, describing the “build, buy or partner” options and saying Nexstar opted to partner given the challenges and capital intensity of building digital platforms.

For NewsNation, Sook said the network was the “number one fastest-growing” network in prime time across major broadcast and cable networks in March 2026, growing 85% in total viewers and 100% among adults 25-54 compared with the prior year. He said NewsNation ranked 35th in total household viewing for all prime time ad-supported cable networks in the first quarter.

Expenses, debt, dividends, and capital allocation

Gliha said combined first-quarter direct operating and SG&A expenses (excluding depreciation and amortization and corporate expenses) increased $76 million, driven primarily by $73 million of recurring incremental expense from the TEGNA acquisition and $4 million in one-time expenses related to legacy Nexstar cost reduction initiatives. Excluding one-time items, she said first-quarter recurring cash operating expenses for legacy Nexstar were lower by $1 million.

Corporate expense was $106 million, including $20 million of non-cash compensation expense, compared with $52 million a year earlier (including $18 million non-cash compensation). Gliha said the increase was primarily due to $38 million of one-time costs associated with the TEGNA acquisition.

On cash flow items, Gliha said first-quarter CapEx was $22 million, down from $35 million, primarily due to delayed spending given the pendency of and plans related to the TEGNA acquisition. She said the company was projecting CapEx in the “$45 million range” in Q2, and estimated second-quarter cash taxes in the “$152 million range.” She said the current quarterly run-rate interest expense based on balances as of April 30 was about $187.5 million, which will fluctuate with SOFR rates and decline as debt is repaid.

Nexstar returned $56 million to shareholders via dividends during the quarter and maintained its $1.86 per share quarterly dividend, which Sook said represents a 3.7% yield. The company did not repurchase shares in the quarter.

Gliha said outstanding debt at March 31, 2026 was $12.1 billion, up from $6.3 billion at year-end, reflecting the TEGNA acquisition. The cash balance at quarter-end was $379 million, including $12 million related to The CW. She also noted that because The CW is designated an unrestricted subsidiary, its losses are not included in leverage calculations for the company’s credit agreement.

On leverage, Gliha said the net first lien covenant ratio at March 31 was 2.94x, below the credit agreement’s 4.75x covenant, and total net leverage was 3.84x using the same methodology. She said that subsequent to quarter-end, Nexstar repaid its $150 million short-term Term Loan A in full and made $4 million in mandatory amortization payments. She also said the company refinanced its 2027 senior notes with $1.725 billion of 7.25% senior notes due 2034.

Looking ahead, Sook said Nexstar expects to report second-quarter results in early August, which he said will be the first full quarter of reporting “the combined consolidated results of the new Nexstar.”

About Nexstar Media Group NASDAQ: NXST

Nexstar Media Group, Inc is a diversified American media company engaged primarily in the ownership, operation and strategic affiliation of local television stations, digital platforms and cable networks. The company provides a range of broadcast content, including local news, sports coverage, entertainment programming and syndicated shows, reaching audiences in more than 100 television markets across the United States.

Founded in 1996 by entrepreneur Perry Sook and headquartered in Irving, Texas, Nexstar has built its presence through organic growth and a series of high-profile acquisitions.

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