Good morning, everyone. My name is Avi Steiner, and I cover the media sector from the debt side here at JP Morgan. It's our pleasure to have with us at the 51st annual J.P. Morgan TMC Conference, representatives from Nexstar Media. With us here today is Perry Sook, Chairman and CEO, Tom Carter, President and COO, and Lee Ann Gliha, Chief Financial Officer. I'm gonna run through some Q&A. We're gonna have some spirited back and forth here, hopefully, and then I will open it up to the floor for any questions and if anyone has questions online as well. With that, thank you all for being here. It's a real pleasure. Perry, I'm gonna start with, kind of maybe a broader question here. You've long been grouped with other local broadcasters like Tegna, Gray, and Sinclair. Given your growth, you're more than 50% bigger than the largest of those companies with a substantially larger market cap. With your investments in NewsNation, acquisition of a major broadcast network in The CW, you're starting to look more like the larger, diversified media companies, but perhaps more free cash flow-focused. How do you think about your positioning in public markets, and how do you differentiate yourself? I think the statement you just made probably defines us pretty well. We're beginning to look a lot like a larger diversified media company, but we are extremely free cash flow focused. I think that is what differentiates us in the marketplace. We kinda think of ourselves as a unicorn, way bigger than the pure play broadcasters and with a cable network and a broadcast network, in addition to all of our station assets. You know, we look a lot more like companies that are larger and a little bit more diversified. As, hopefully, we grow into that definition over time, but the one thing that won't change is our laser focus on free cash flow. All right. That's a wonderful segue. Extremely free cash flow focused. I think I calculate the average 2023, 2024 free cash flow yield to your equity to be above 20%. You'll correct me if the math is wrong. What does management believe the market is missing or that investors might be too pessimistic about? Yeah, I'll take this one. You know, I think, you know, your math's correct on the 21%. I think what investors are missing is that we're gonna be generating cash flow five years on. If you just take our average annual free cash flow guidance of $1.25 billion for 2023, 2024, you know, our market cap is taken care of in less than five years. I think what investors are thinking is that we just don't have growth prospects beyond that, and that we just don't agree with. I think even if you just take our core business and say, okay, that business is gonna grow for some period of time and maybe it doesn't grow forever, we do have a number of internal organic growth prospects that could be really significant. You know, the first and foremost is one that everyone likes to talk about, which is our acquisition of The CW Network. We believe that can be a significant growth engine for the company. If you just look at the other networks that are out there and what they've been able to accomplish over time with similar footprints, we think that there's opportunity there. Number two, we think that we have a great business in NewsNation, which, if you just look at what Fox has done with Fox News or CNN has done, there's significant opportunity with respect to the ability for that to grow and to create value over time. Third, we've got our ATSC 3.0 opportunity, which is the monetization of our spectrum in a B2B data transmission services environment, which we think could be as big as our distribution revenues are, which is half of our revenue as it stands today. I think what investors are looking at is they get sort of bogged down with the existential crisis of what's gonna happen with cable television subscribers, and they're sort of forgetting that there's a bigger company there and an opportunity to grow over time. That's terrific. I'm gonna hit on definitely some of those topics that you brought up. But maybe one more, just on the free cash flow/valuation point. Can you remind the audience the size of your share buyback authorization and maybe how you all think about capital allocation here between share repurchases, debt reduction, investments in the business? Go ahead. Yeah. We've got about $1 billion one-ish left on our share purchase authorization as it stands today. You know, our strategy really is to create the highest and best return for our shareholders. You know, historically, if you look over time, that's actually been M&A. You know, the company has really kind of grown its share price pretty dramatically by making very, very accretive acquisitions. So we like to have a balance sheet that's available and ready to execute on that type of a transaction should that come to be. We have some required calls on our capital. We do have some mandatory amortization, which is minimal. It's about $120 million a year from a debt perspective that we have to repay. We also have a dividend, which we increased this year to... We increased it by 50% versus our normal 25% increase. After that, we sort of look at what is the best use of capital. If we don't have an M&A transaction, we look to buy back stock at that really great 21% return. You know, we can, we feel like that's a good use of our capital versus, you know, repaying debt, which is, you know, kind of in the after tax in the 5%-6% range. All right. Terrific. Let's go broader here and start with the ad environment, if I can. Can we get a snapshot of what the company's seeing today? I believe on the last call you had said you had seen a slight slowing in the second quarter versus how things shook out in the first. Correct me if I'm wrong there as well. Then let us know if that's still the case or however you can enlighten us. Thank you. Sure. I would say, it's generally the same. I think what we've seen is a couple of particular things. Just as a backdrop, about 70% of our advertising revenue is locally generated, 30% is nationally generated. The local business has been much more resilient than the national business. For each of the last couple of quarters, our national business has been down double digits and our local business has been down low single digits. We're seeing a little bit of softening in some of the larger local markets. The top five markets in the country tend to behave more like a national advertising market as opposed to our local markets, and we're seeing that in the New York, Chicago, Los Angeles, et cetera. That's a little bit of the weakness. Also there has been, and I know we'll get into this a little bit more, auto has been up double digits each of the last two quarters. It's not up double digits in the first quarter because we're seeing, in particular, a couple of Japanese nameplates having trouble getting inventory on the lots for their dealers, and that's the biggest emphasis for dealers to come back into the market for local advertising is inventory. We're not seeing that with the domestic manufacturers. We're not seeing it with the Korean manufacturers or European. It seems to be, you know, kind of targeted at a couple of Japanese nameplates, and that's taken a little bit off of auto growth, which has affected overall local growth as well. All right. Thank you for that. Let's touch on auto a little bit more if we can. I'd love to get a sense of how important a category is it for the company, number one. You touched on maybe softness on the Japanese manufacturer side due to availability, obviously supply. You know, Tesla recently talked about them potentially starting to advertise. Obviously, they don't have a dealer group, but it still seems like the trend is your friend in going higher. Whatever you can tell us about auto would be terrific. Sure. auto is and has been our largest category. Back, you know, in pre 2008- 2010 recession, it was as high as a mid to high 20% of our total advertising. It bottomed out probably at 15% in 2010, and right now it's probably closer to 17%-19% of our total advertising. It's still our largest category. As auto has kind of ebbed and flowed, other categories have taken up as well. You know, hospital, medical, pharma, all of those are large categories for us. It's still our largest category. It's one that we, you know, spend a lot of time thinking about and talking to dealers on a local basis about, but it's not quite as, you know, a big a factor as it was 10 or 12 years ago. Perfect. Very last one, you touched on the local national split, which I believe you said is 70/30. That must have evolved some with The CW now in the mix, NewsNation now in the mix. Maybe talk about how that's evolved and how your portfolio is positioned to capture those dollars. You know, The CW, unfortunately, historically, has not been a major contributor to advertising dollars. It has shifted it by, you know, a point or two, but not in a meaningful way. Look, in addition to all the initiatives that Lee Ann had mentioned, we've hired for the first time a Chief Revenue Officer, and he and his team are really focused on the national market. We're participating in the upfront this year for the first time because we now have a portfolio of national assets that are large enough to matter and to be meaningful to advertisers. The CW, NewsNation, you know, we cover 68% of the population with our local television group. We can put together an unwired network for advertising on a national or a regional basis there. We have 90 million uniques monthly on our news and information websites. It's a top 10 news and information portfolio of assets. All of that can be bundled together in a national product to take to the market, which is something that we've never had before of that scale and that level of interest. We're very excited about that opportunity going forward. I really wanna ask about retrans, but you brought up CW a couple of times here, so I'm gonna skip to the CW and maybe ask a couple of questions there. I think it's been a little over six months since you closed on the acquisition of 75% of the network. It's early days, but I think it's worth discussing the changes you're making on the network from the cost side first and maybe how that's trended relative to your expectations. In the grand Nexstar tradition, we have been able to exceed our cost takeout targets across the board, and that is, at this point, for the most part, behind us in the rearview mirror. That's already been achieved on both the programming side and on the operations and overhead side. Okay. Perry, you've all talked glowingly about The CW last week or maybe two weeks ago. You had the upfront, I'm gonna quote, I don't generally do this, but I saw a great headline in Vanity Fair talking about The CW upfront, which noted superheroes mostly fly away in describing the upfront. Maybe talk about the entertainment programming changes you're making, I know you can't make all of them at once. I'd also love to dive into why those are important to make. The CW was run for the benefit of the two studio owners prior to our taking over, which were Warner's and CBS Paramount. You know, the shows that worked well in their syndication model were, I call them the comic book shows, right? The superhero shows. Some called them the men in tights shows. You know, they attracted a loyal audience, but it was not a very large audience. In fact, with the changing demography, it was a declining audience. We looked at The CW and said, the average user of The CW app is in their mid-thirties. The average viewer of the linear network is in their late fifties. A lot of hue and cry about that at the time, you know, the facts and data don't lie. We said, "We need to program this network on the linear side, to a broader audience, a slightly older audience." You know, it is a broadcast network, so we should be looking to attract the largest possible audience possible. With the exception of two shows in the fall, both of which that will be likely impacted by the Writers Strike and have a delayed start to maybe first quarter, our schedule will be entirely new. You know, there'll be shows that my wife would love to watch, you know, Sullivan's Crossing. That's done by the same folks that do Virgin River. We have a night of sitcoms, which The CW hasn't really had since it was The WB, and that was 15 years ago. We have a night of reality. We're gonna air FBoy Island, which, you know, won't attract everybody in this room, but might attract some in this room because it's saucy reality along the lines of The Bachelor, The Bachelorette. We're trying to make some noise. You know, we think that by definition we will reach a more diverse audience than we have historically. We hope it will be a larger audience than we have had historically. Definitely looking forward to the new season. Okay, subscriber fees, retrans net, retrans some topics that are obviously focal points, but at times give consternation. Let's start here. Your net distribution revenue guidance for the year, quite healthy. Can you contrast that with the drumbeat of declining pay-TV subscribers? That seems to be a constant talking point. It's a reality, but it's also a constant talking point. It doesn't mesh with your own guidance. Thank you. Right. Well, I, you know, how long have we been, tracking or talking about subscriber declines in the traditional pay TV universe? I think it's now for a decade. With that overlay, our distribution revenue has increased every year sequentially, over the last decade, and it's very simple. Our ability to get rate trumps the churn or decline in the subscriber base. The fact that there are new subscriber sources, virtual MVPDs, Paramount+ and Peacock, where, you know, if it's in the pay TV ecosystem, we're participating in it in some way, shape, or form. While distribution may go, revenue may go from one pocket to another, you know, we're still participating as long as there is some pay TV service. It gives me solace that, you know, 75% of adults over the age of 45 maintain a pay TV subscription of some sort. You know, if you're looking for a firewall, I think that's as good a place to start as any. Okay. Nexstar and the CBS affiliate group held pretty firm at the beginning of the Fubo-CBS network deal discussions. I think that ultimately was recut in your favor, at least a better outcome. You can correct me on that as well. Since then, the company has signed agreements for its independent CW stations with Hulu and YouTube TV. The question here is really when might things evolve to the point where the local TV station group owners, such as yourselves, might be able to negotiate carriage directly with the virtual distributors for their big four affiliates? I would say that, you know, from our perspective, these discussions are about money and clearance. Our delay in reaching agreement was not a change in the business thesis for the industry, even though we saw $1.5 billion in market cap disappear because of a dispute with the smallest virtual MVPD, it was a fight over money and clearance. As a result, now we have, we achieved the financial points that we were looking to achieve. We also have clearance for all of our CWs as well as all of our independent stations, all of our MyNetwork stations, and you know, a lot of real estate that we wanted to get cleared and paid over the course of this. But, you know, we, as a owner of The CW, are constructing a new affiliation agreement template that would allow affiliates to opt out of The CW deal with the virtual MVPDs and cut their own deal, or they could opt into the deal that we have already established for them. The larger companies are going to opt out because they have other business to do with the virtuals. The smaller companies are going to say, "I can't do as well on my own." It goes back to the comment I made earlier about distribution negotiations are all about scale and leverage. We can't be advocating for this and then put our network hat on and say, "Not so fast." Will other networks follow The CW's lead? We are hopeful. We certainly have advocated that with our network affiliate hat on to all of the other networks that, you know, you built the business with the traditional MVPDs without using our proxies to get there. Why are the virtual MVPDs any different? There's really no defensible argument for that. We're gonna lead by example. That'll be fascinating to watch, and hopefully they do follow your lead. A couple more here if I can. Somewhat same topic. NBC is going to stream a wildcard game exclusively on Peacock, and the shift in certain programming by networks to their streaming platforms would seem to impact discussions with the network. I'm wondering if you can confirm and possibly talk about that. We pay the big four networks and The CW as an affiliate group, but we pay them for the content they provide and exclusivity for that content in the local markets for a period of time. To the extent that the content is less and less exclusive, it becomes rapidly less and less valuable to us over time. You know, as a playoff game on Peacock is certainly not helpful to the ecosystem and doesn't do any favors for us. We've registered that point of view with Mike Cavanagh and Mark Lazarus and, but they, you know, they didn't need our permission and didn't call for advice. We have made the point that less and less exclusivity is gonna lead to less and less dollars from your franchisees, which are the affiliates. Okay, last one on this topic, somewhat, dovetailing off that last point. There's increased discussion on when ESPN might go direct to consumer, and I'm curious how Nexstar thinks that might impact the cable bundle and local television's place within the ecosystem. Well, it's interesting 'cause I've got a meeting with Bob Iger next week. I'm sure we'll have discussions on this. I think he has gone from traditional TV being at the precipice to saying, "Wait a minute, traditional TV generates a lot of money and free cash that is funding my streaming ambitions right now." You know, I think there is a new renaissance. You know, when I started in the business in the late 1970s and in early 1980s, all sports was on broadcast TV. RSNs did not exist. You know, over at Pix in New York, we had the Yankees and the Mets and the Nets. Same thing at the station I worked for in Dallas. Over time, with the rise of the RSNs, the sports migrated to virtually no sports being on over the year. you know, our deal with LIV Golf for the CW opened up the phone lines saying, "Hey, We're open for business to televise sports on a broadcast network that reaches 100% of the country and is free. You don't need a pay service if you choose not to use one to consume it." We've heard from college leagues, we've heard from professional leagues. Basically anyone who's got a rights deal up any time in the next four years has been in contact with us, and we're talking to everybody. I think you're going to see a rotation of sports back to broadcast television because it reaches the 30% of the market that the pay-TV universe doesn't reach. You know, our deal with Steve Ballmer and KTLA in Los Angeles for some Clippers games, as well as our deal with LIV Golf, has really kind of kickstarted those discussions for Nexstar as a company. It's a wonderful segue into my next question. Before I do that, I want to remind everybody, we are gonna open the room up to questions. If anybody has questions that's listening on the web, you can do so through the JPMorgan portal. We'll see the questions, I will ask them. With that, I'm gonna turn it back to my own list, briefly here. You touched on LIV, bringing it to The CW. Maybe talk about how that's performed relative to your early expectations. It's really a tale of two stories. On a national basis, obviously, The CW has never done weekend sports before, there really was no ratings, no information for advertisers to buy on, and that's what they do in the national market. That's been a very, a slow build on the national side. The good news is, on the local side, first of all, we got 100% clearance of LIV in less than a week, the vast majority of which were on The CW affiliates. There were a couple of The CW affiliates that, for their own reasons, didn't opt into that, and we found coverage elsewhere in those markets with non-The CW affiliates. We will take care of that in these next round of network negotiations, that they will also opt in for all of the sports programming on the weekend. The good news from the affiliate side is it's massively successful on the local basis because, again, these sub CW affiliates locally have never had sports to sell, or at least national sports to sell, and now they do. It's up against other types of programming on weekend afternoons on the CW, which is paid television, reruns, movies, et cetera, and LIV is doing very well locally for the affiliates, which we're excited about because then we get to remind them of that next time we talk to them about network affiliation agreement and network affiliation payments. If you can add on a league or two or a sport or two in the next coming cycle, which we believe we will be able to do, that gives us even more programming to sell to our network affiliates and to charge them for. We're very excited about all of this sports ecosystem. Perry mentioned as well, we're and others are talking to local franchises about their sports rights because you know, the goose that laid the golden egg for them historically has been the RSNs, and that part of the economic equation may or may not be there, and if it is there, isn't gonna be there in the same degree it has been historically. I think they're looking to diversify. The pitch to them, we've seen this in the Los Angeles Clippers deal, the pitch to them is not just an economic pitch, it's a marketing pitch. What they're seeing is what everybody else is seeing, is the shrinking pay television universe, and then within the pay television universe, the shrinking importance of the RSNs. The Los Angeles Clippers looked up at the end of the day, and they're only reaching a fraction of the Southern California market. At KTLA, we reach all of the market. We're fully distributed on all the pay television services. Oh, by the way, we're fully distributed over the air to anybody that doesn't take a pay television service. The reach that they're achieving is up over 100% relative to what they were seeing on an RSN-only basis. That's the sales pitch. It's not just about the fees that they get, which are not, you know, inconsequential, but it's about the marketing. It's about bringing them to the game. It's about the merchandise sale. It's about everything else that comes. As a sports franchise owner. The benefit to Nexstar is advertising revenue, retrans, and just making the platform more valuable. Are we? More valuable and, you know, integrating all of their players into our morning programming, doing other things, community outreach. You know, basically all of the things that we normally do with almost any advertiser, we're doing with the Clippers to, you know, ingratiate themselves even more into the market. Look, they've got a strong competitor in the market, and they've got to fight fire with fire. I could talk about this all day, but let me throw off a quick one here. The next sports opportunity for you, 'cause you've kinda teased it a little bit, and you don't have to answer this question, but is it college? Is it pickleball type new sports leagues, or is it some RSN type opportunity of a local team? I'm putting you on the spot. Go for it. It's not pickleball. Okay. Okay. A Okay. A few folks disappointed in the audience. The opportunities are greater than that, and we're shooting higher than that. Love it. Fantastic. Are there any questions in the room? I've got many more, but if anyone... Go ahead. Hold on, the mic's coming to you so the web folks on the web can hear it. Hello. You're good. Okay. Good morning. Thank you for the opportunity to ask a question, and thank you for the information. As it relates to, growing your market audience and the 68% market share that you have across the country, is there any renewed focus on acquiring, content from BIPOC creatives and also securing a larger share of the BIPOC audience? A gentleman by the name of Sean Compton leads all of our content acquisition efforts across all platforms, the local stations, the broadcast network, the cable network, the diginets, and he'd be the appropriate person to direct those questions for. I've not heard of any discussions or intentions, but that doesn't mean that those conversations are not going on. Okay. I'm gonna go back to my list, and then unless there are any other questions in the room. Thank you. A reminder, you can do so online as well, just through the JPM portal. Let's touch on political very quickly, and then we've got a couple more. We are in the cyclical low odd year, as we all know, of political ad spend, yet there are signs of early spend and maybe way too much discussion about the next presidential election. Sorry for my own editorial. What are you seeing at this early stage? Well, you're right. We're seeing political advertising coming in sooner than we've ever seen it before. It's not in hugely meaningful numbers yet, I think it's just directionally what we think is gonna happen is, look, we've got what promises, I think, to be a competitive Republican primary and the fight for that. It'll be interesting to see what happens with regard to on the Democratic side, if others join or if Kennedy can bring enough money with him to make that an interesting primary. The bottom line is it's still very contentious out there. We're seeing a lot more advertising move to party advertising and PAC advertising in a way necessarily from just candidate spend. Just to remind you, federal candidate advertising is the only advertising that we're subject to rate restrictions on. PAC and party money, we're not subject to those restrictions. It's whatever clears the market basis. From that perspective, we expect, and just to give people a bit of basis here, 2020 was the largest, for Nexstar was the greatest amount of political spend that we had ever had, and that was the last presidential election. 2022 almost matched that within literally a single-digit millions amount of the same political advertising in a non-presidential year. We believe that this presidential year will be, you know, leaps and bounds in front of that with regard to total political spend. Obviously, the majority of that will come in Q3 and Q4 of 2024, but we are no less bullish about the prospects for political advertising in this two year cycle, as we were when we gave our original guidance. Terrific. I may come back to the political one, but I wanna shift gears a little bit here to M&A and the regulatory environment, if I can. Standard General's acquisition of Tegna was ultimately referred by the FCC for a Hearing Designation Order, which killed the deal. I think that was formal on Monday. Would love to get your thoughts on the current regulatory environment here. You obviously have the scale and the reach, and you don't need necessarily to get into M&A, although at the same time, you just bought a station in San Diego. You... I'm throwing a lot in there, but if you can touch on all of it, that'll be terrific. FCC, San Diego, regulatory backdrop. Go for it. Well, since you mentioned San Diego, that was something that I've been working on for about three years. We bought a second or have announced we're gonna buy a second station by Nexstar in the San Diego market, and it's not ranked in the top four. It's not a local news station, which fits in well with our playbook from that perspective. This in our view, goes right down the middle of the fairway with regard to what the FCC rules allow. We're gonna test and make sure that that is in fact the case over the case or the course of the next several months. You're right. I think right now, you know, the FCC is a little bit of a wildcard with regard to exactly what this administration is looking to do, you know, with regard, specifically with regard to the Tegna transaction that you mentioned before. You know, we were pleased, and, you know, happy that the DOJ approved it, and then yet immediately, almost immediately after that, the FCC came behind it and designated it for the Administrative Law Judge. That was a surprising move from our perspective and a disappointing one because we think it does affect broadcast M&A. We're a participant in broadcast M&A, but not to the same degree we were three and five years ago. In terms of our ability to do transactions, our transactions now have to be much more targeted and to thread a pretty fine needle with regard to broadcast M&A, which we're still very interested in, see the economics and the value creation from it. Just has to be a much tighter window that we can participate in. I think if there's good that comes from this is there is a growing recognition on Capitol Hill on both sides of the aisle that the regulatory approval process may be broken, and that may lead to oversight, that may lead to real reform. We're hopeful there. I've been sitting here almost as long as you have. I'm hopeful as well. We'll see what happens. ATSC 3.0, Lee Ann, and you don't need to necessarily answer this, but you pointed that out as one of the kind of three pillars that people may not be focused on in terms of future growth opportunities. I'm wondering if you could talk about it. It's been an industry discussion point for years. At least the letters have come up in almost every meeting for a very long time. Maybe enlighten us on the opportunities and when that's actually gonna hit the P&L, as it were. Yeah. I mean, look, it's an opportunity now, and I think you're hearing more about it now, and you've heard about it for a long time 'cause it's been out there. It's just now that we really have the capability of making it into a reality, and that's really because of the consolidation in the industry. If you think about, you know, if you kind of roll back 10 years, you know, you had to if you were gonna try to get to a nationwide footprint for spectrum, you would have to cobble together, you know, a number of different broadcasters. Now we have a relationship, a partnership with Scripps, where, you know, you put our spectrum together with Scripps, and all of a sudden we cover 90%+ of the country. I think, you know, people have been hearing about it, but now it's, now it's more of a reality because we actually have the capability of saying, "Okay, you know, one plus one equals the whole country." We've got our infrastructure in place, we've got our towers in place, and now it's just a matter of executing. You know, we're well on our way to our goal of upgrading the stations that we have, we're covering about 50% of the country. Once we get that done, then it's sort of an, you know, an, you know, an, you know, hopefully will flow thereafter. you know, we're working with HP and with Sony on various different commercialization opportunities. We hope we'll have something to talk about in terms of the testing of the opportunity there. At the end of the day, it's high-speed data transmission. That's really all it is. It's pretty simple business model. There's other people out there that do it. I think we've got a unique opportunity because we've got a lot of bandwidth in covering the country. It's not sort of something that'll happen in the next couple of years in any meaningful way. You know, if you look, BIA has some projections out there that says, you know, you know, in the 2030 timeframe, it could be as big as what we are currently generating from retrans. There are tons of private 5G networks out there that do a lot of the work that we can do. Most importantly, we can do it at a fraction of the cost. If you wanna look at where some of the low-hanging fruit might come from as we roll this out, going forward, I think it's gonna be from those kinds of existing services. It's a perfect place to stop. As they say, stay tuned for that revenue opportunity. Thank you all for joining us today. Much appreciated. Thank you. Thank you. Thank you.