Hey, welcome to Nexstar Media Group's First Quarter 2023 Conference Call. Today's call is being recorded. Now, I'll turn the conference over to Joe Jaffoni, Investor Relations. Please go ahead, sir. Thank you, Kyle, and good morning, everyone. Let me read the safe harbor language, and then we'll get right into the call and your questions and answers. All statements and comments made by management during this conference call, other than statements of historical fact, may be deemed forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Nexstar cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those reflected by the forward-looking statements made during this call. For additional details on these risks and uncertainties, please see Nexstar's annual report on Form 10-K for the year ended December 31st, 2022, as filed with the Securities and Exchange Commission, and Nexstar's subsequent public filings with the SEC. Nexstar undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Thank you for your patience with that. It's now my pleasure to turn the conference over to your host, Nexstar Chairman and CEO, Perry Sook. Perry, please go ahead. Thank you, Joe. Good morning, everyone. We appreciate you all joining us today to discuss Nexstar's first quarter results. With me on the call today, Tom Carter, our President and COO, and Lee Ann Gliha, our CFO. I will start with a summary of our recent highlights and developments, followed by Tom's operations review and Lee Ann's financial review. Nexstar's first quarter financial results mark a very strong start to the year for the company. Record first quarter net revenues were driven by all-time high quarterly distribution revenue and the benefit of The CW acquisition, which more than offset the cyclical year-over-year decline in political and Olympic advertising. Net revenue, adjusted EBITDA and attributable free cash flow all came in ahead of consensus estimates, extending our long-term record of exceeding expectations. We returned nearly 60% of our attributable free cash flow, or approximately $6.25 per share to our shareholders in the form of dividends and share repurchases in the quarter. While economic uncertainty and rapidly changing expectations regarding monetary policy are contributing to the turbulent markets, the scale and the financial success and strength of our highly diversified and profitable operating model, combined with our focus on execution, drove excellent results and strong shareholder returns in the quarter. Looking ahead, we remain positioned to perform well in the current environment with over 50% of our net revenue derived from contractual and recurring high-margin distribution revenue, and 2/3 of our core advertising revenue comprised of more resilient local advertising. During the quarter and subsequent to quarter end, Nexstar successfully reached new multi-year agreements with two of the largest virtual MVPDs, YouTube TV and Hulu. In addition to extending carriage of our big four network stations, which were up for a renewal, both operators are now carrying Nexstar's My Network and independent stations as well. In addition, Hulu will continue to carry Nexstar's owned and operated CW stations, and YouTube TV will initiate carriage of our CW affiliates this year. These agreements again validate what we already know to be true. Consumers and distributors value Nexstar's local content. As America's largest local broadcasting company and one of the nation's largest producers and distributors of local and national news, sports, and entertainment content, our television assets reach over 210 million Americans. As such, our stations, networks, and cable offerings continue to represent an attractive value proposition to virtual MVPDs seeking to enhance the competitiveness of their video offerings. Given recent volatility in our share price performance, driven by misplaced speculation surrounding distribution agreement and some negotiations, it's important to step back for a moment and separate the reality from the noise. First and foremost, we stand behind our guidance of distribution revenue growth to be up in the high single to low double digits for 2023, excluding the benefit of the CW. In the first quarter, our distribution revenue increased 9% over last year, despite the impact of the removal of our partner stations on certain MVPDs related to ongoing contract negotiations. Since the first dollar of retrans revenue that we generated almost 20 years ago, distribution negotiations have always been hard fought by both parties. There have been several cases in the past when typically private negotiations are played out publicly, or Nexstar or our partner stations have been forced to go dark until we reach a fair agreement. For us, this is business as usual, whether Nexstar is negotiating directly or indirectly through our network affiliation boards. With approximately 40% of our subscribers up for renewal this year, we expect continued growth throughout 2023 and beyond. In addition to posting another strong quarter of financial results, we continue to execute our strategy focused on leveraging our linear, digital and mobile and streaming assets in new ways to drive increased monetization and growth across our portfolio. We're also driving strong momentum across our organic growth initiatives. First, we're making significant progress on our operating plan for The CW. Having executed the lion's share of our corporate overhead savings and making our key personnel appointments, all by the end of the first quarter. We also launched new sports and sports-related programming, including LIV Golf on The CW and 100 Days to Indy, a motorsports docuseries following the drivers and teams from IndyCar Racing leading up to the Indianapolis 500. We're extremely pleased with the early results of our LIV Golf partnership. Despite being a completely new sports league. Sports for the first time on The CW. Our ratings performance to date has been significantly exceeding previously aired programming on those stations during the time period. LIV Golf audiences are also increasingly engaging with LIV Golf on The CW app. For the most recent LIV Golf event weekend in Singapore, The CW app audiences watched for 96 minutes on average over the three-day event, and on the final day they watched for over two hours on the app. On the advertising front, our The CW affiliates are already benefiting from increased local revenue, and we expect national revenue on the network to grow over time as we air more events and establish a ratings track record. With the upfronts quickly approaching, you have seen and can expect to see a variety of new programming announcements for The CW's 2023, 2024 season. Consistent with our plan, our programming lineup will feature a more diversified mix of scripted and unscripted shows, which we anticipate will drive ratings growth. Several of the highly acclaimed new scripted series included in our summer and fall schedules have already been written and produced and are therefore not affected by the current writers strike. Second, NewsNation continues to build and grow, with the first quarter achieving the highest audience delivery to date. During the quarter, we launched all new NewsNation connected television apps on a variety of major OTT and CTV platforms. We added key journalists and expanded our roster of political, legal, national security, and medical contributors. In April, NewsNation marked a major cable news milestone by becoming a 24/5 news network with the debut of new expanded daytime programming, as well as the launch of the network's political ensemble show, The Hill, and evening news program, Elizabeth Vargas Reports. Overall, our strategy to leverage our core competency in news to build a profitable, differentiated, and highly valuable national cable news network is delivering results. We remain the fastest growing cable news network in the most watched genre of cable television, with content that continues to be rated as unbiased and trustworthy by the leading watchdog groups. We've all seen the major changes that are taking place at the incumbents in this space. We believe that this activity only strengthens NewsNation's ability to build awareness, audience, and profits. Finally, we continue to make progress on our deployment of NextGen TV or ATSC 3.0. In Q1, we launched three additional markets, and as of today, we've completed the transition of stations covering 37.5% of the U.S. population, and we are well on our way to achieving our near-term goal of reaching 50% of the country. As discussed previously, Nexstar partnered with Scripps to leverage the combined power of our station portfolios, which together reach over 90% of the country. As part of our partnership, we're collaborating with Hewlett Packard Enterprise and Sony to create powerful new high-speed data solutions for businesses that are planning use cases and simulations with a variety of applications for vehicles utilized by agricultural businesses, logistic companies, and first responders. The partnership and nationwide scale of our combined coverage demonstrates why the ATSC 3.0 opportunity is more actionable now than ever before. Thanks to the industry consolidation over the last decade, we're now in a position where just two broadcast operators working together can cover the majority of U.S. television households, while before it would have required the collaboration of many operators. Aiding our effort last month at the NAB Show, FCC Chair Jessica Rosenworcel announced the Future of Television Initiative, a new effort designed as a public-private partnership to ensure a smooth transition to ATSC 3.0 for broadcasters, associated industries, and the public. We view this initiative as an important step forward as regulatory support for the transition helps expedite our time to market. We're also happy to have announced yesterday the acquisition of KUSI, an independent station in San Diego, the nation's 30th largest television market. The station is already a powerhouse local news organization, and together with our O&O station in the market, Fox affiliate KSWB-TV, we will offer more local news and information programming than all the other local stations in the market combined. The acquisition will be instrumental in expediting our transition to ATSC 3.0 in San Diego and will benefit economically from recapturing The CW affiliate on a primary signal when the affiliation becomes available in the market. We expect the transition to close later this year and to be accretive once we're able to reprogram the asset with The CW programming. In summary, we remain confident in our strategy and ability to continue to generate significant free cash flow. Consistent with our capital allocation priorities and focus on enhancing shareholder value, in January, the Board of Directors increased Nexstar's quarterly cash dividend by 50% to $1.35 per share per quarter, substantially increasing our historical compound annual dividend growth rate of 25%. Our strong free cash flow enables us not only to increase the percentage of capital returned to shareholders in the form of dividends, but also to continue to opportunistically repurchase shares, as well as reduce debt and pursue other strategic opportunities to further enhance value for our shareholders. All of that said, let me now turn the call over to Tom Carter for the operations review. Tom? Thanks, Perry, and good morning, everyone. We generated another first quarter of strong operating performance with all-time high first quarter net revenue of $1.26 billion, a 3.9% increase from the prior year. Results were driven by the benefit of The CW acquisition and record quarterly distribution revenues, partially offset by a decline in television advertising, primarily due to the absence of midterm political and Olympic advertising, as well as continued advertising softness, primarily in national, which is a smaller part of our ad revenue mix. Excluding the results of The CW, net revenue was essentially flat from the prior year quarter. Core television advertising decreased 2.6% year-over-year. Excluding The CW, core advertising was down approximately 8.5%, primarily driven by double-digit rates of decline in national spot advertising, which accounts for nearly 30% of our core TV ad revenues. Nexstar's local television ad revenue, which represents approximately 70% of our total core television ad revenues, excluding The CW, continues to meaningfully outperform national, declining low single digits. This performance is consistent with our guidance we provided on our last call. In Q2 2023, we are seeing similar results in the national market to what we saw in the first quarter, with a modestly softening local market driven in part by a slowing rate of growth in automotive and by our unique exposure to local markets in the top 20 DMAs, notably New York, Los Angeles, Chicago, and Tampa, where local advertising markets behave more like national markets. Excluding The CW, our top-performing categories in the quarter were automotive, home repair, manufacturing, attorneys, entertainment, and travel. We're extremely pleased to see automotive, our largest advertising category in terms of dollars spent, maintain its growth trajectory for the third consecutive quarter, increasing 12% over Q1 of 2022. While overall automotive spending remains below 2019 levels, we're encouraged by the continued rebound in this category. The categories primarily responsible for core advertising revenue softness were gaming, sports betting, radio, TV, cable, newspaper, medical healthcare, insurance, and telecom. The sports betting and gambling category decline was due to fewer states launching in the quarter and reduced spending in more established markets. Turning to political, Nexstar generated first quarter political advertising revenue of $8 million, reflecting the cyclical year-over-year decline in election year spending. In April, we experienced the earliest spending for a presidential race in the company's history, with early bookings from the Trump, DeSantis, and Biden PACs. As a result, we remain very optimistic about our growth prospects for political advertising revenue in the 2023/2024 election cycle. Nexstar delivered record quarterly distribution revenues of approximately $728 million, marking a 9% increase over the prior year. Revenue growth was driven by the renewal of distribution agreements in 2022 on improved terms and the annual rate escalators, as well as growth in virtual MVPD revenue and the inclusion of The CW. Our growth was achieved despite MVPD subscriber attrition and the ongoing impact of the removal of some of our partner stations' carriage related to continued negotiations with certain MVPDs. Estimated year-over-year subscriber attrition was in the low to mid single digits, which improved during the last quarter due to the positive impact of increased carriage of our CW, MyNetwork, and independent stations on YouTube TV. Excluding the CW, our distribution revenue was up 6.8%. As Perry mentioned, including the benefit of the CW affiliation fees, given our 2022 contract resets, we continue to expect distribution revenue to be up high single-digit to low double-digit for 2023. Depending on the outcome of distribution contracts we have up for renewal, the outcome of our partners' ongoing negotiations with a couple of the MVPDs on which they're currently dark, and trends in MVPD subscriber attrition. CW distribution fees will have a slight positive impact on our overall year-over-year growth rates as we lap the acquisition date at the end of the third quarter. We continue to expect our affiliation expenses will increase in the mid-single digit rate this year, giving a double-digit rate of increase of net distribution revenue for 2023. Record first quarter digital revenue increased 16.5% to approximately $92 million. Revenue growth was driven by inclusion of The CW and year-over-year increases in Nexstar's digital advertising revenue and agency services business. These were more than offset some weakness in e-commerce overall. Including The CW, digital revenue was down low single digits. On a consolidated basis, the first quarter adjusted EBITDA was $491 million, representing a 39.1% margin, and first quarter attributable free cash flow was $383 million. Excluding The CW, the first quarter adjusted EBITDA was $566 million, representing a 47.2% margin, and the first quarter free cash flow was $438 million, amounting to 77% of adjusted EBITDA. In preparation for Nexstar's 2023 proxy and annual meeting, we conducted an extensive outreach to our shareholders during the first quarter to update them on the company's recent ESG initiatives, which we outlined in our last earnings call, and to solicit their feedback on these matters. We'd like to once again thank our top shareholders for participating in our annual shareholder outreach initiative and for your candid feedback. The input and recommendations of our shareholders who elected to engage with the company were presented to the board of directors for consideration, and a summary of these efforts was included in our 2023 proxy filed at the end of April. We remain focused on evolving our ESG policies and disclosures in a thoughtful manner that supports our employees and communities, as well as our goals for growth and the enhancement of shareholder value. In this regard, during Q1, we published Nexstar's first ESG report, a document that communicates the company's efforts, performance, and goals in ESG. It's available on our website for everyone to access. With that, it's my pleasure to turn the call over to Lee Ann for the remainder of the financial review and update. Lee Ann? Thank you, Tom, and good morning, everyone. As always, Tom and Perry gave you most of the details on the revenue side, so I'll provide a little color on The CW financial results, our TV Food Network distribution, and then jump to expenses, followed by some further discussion on our guidance. In the first quarter, The CW generated $61 million of revenue and $75 million of adjusted EBITDA loss from $7 million of one-time expenses, comprised primarily of restructuring charges, all of which was in line with our projections and expectations. As a reminder, The CW generates revenue primarily from national television and digital advertising, distribution fees from affiliates and virtual MVPDs, as well as some short-term periodic continuing revenue from licensing content to an SVOD player. Since The CW programming schedule is locked in for the 2022–2023 broadcast season, you'll be able to see the Nexstar playbook start to fold only in the fourth quarter of this year. Moving back to our consolidated expenses. Together, first quarter direct operating and SG&A expenses increased $65 million, primarily due to the inclusion of The CW, which including the one-time restructuring expenses of approximately $7 million I mentioned a minute ago, accounted for $37 million of the difference, with the remaining amount due to increased affiliation fees due to increased distribution revenues and the expansion of local news at our Washington, D.C. bureau and other local markets, as well as the expansion of our news programming at NewsNation, which was partially offset in our adjusted EBITDA and free cash flow calculations by reduced programming costs at NewsNation related to reduced reliance on syndicated content. Q1 2023 corporate expense was approximately $48 million, including non-cash compensation expense of $14 million, compared to $47 million, including non-cash compensation expense of $13 million in the first quarter of 2022. Q1 2023 depreciation and amortization was $249 million versus $145 million in the prior year quarter, due primarily to the acquisition of The CW. Please note that The CW's programming costs, which are included in our definitions of adjusted EBITDA and free cash flow, are accounted for in this line item as amortization of broadcast rights. For more information on this amount, please refer to the schedules in our earnings release. First quarter CapEx was $37 million and in line with our expectations compared to $28 million in the first quarter last year. Last year's first quarter CapEx was artificially low given supply chain constraints. The Q1 2023 CapEx increase also reflects some carryover CapEx from Q4 2022 that was paid in the quarter. First quarter net interest expense increased $107 million from $69 million in the prior year quarter due to the impact of increasing LIBOR and SOFR rates applicable to our floating rate debt. Cash interest expenses was $104 million for the quarter, slightly lower than our expectations due to actual versus estimated interest rates and interest income. First quarter operating taxes were $2 million, as we only have a few state tax payments in the quarter. We received $226 million in Q1 distributions from equity investments related primarily to our 31% ownership in the TV Food Network, which represents a 17% increase over the prior year quarter. Our TV Food Network distribution included $69 million related to our attributable share of the net proceeds from an accounts receivable securitization program at Warner Bros. Discovery. Because this securitization is one time in nature, we have excluded these proceeds from our definitions of adjusted EBITDA, attributable free cash flow, and free cash flow. Over time, TV Food Network may increase or decrease its securitization program. If it chooses to reduce the program in the future and build back up its receivables balance, we will amortize the proportional amount of this cash securitization distribution back into adjusted EBITDA and free cash flow accordingly. Excluding the securitization distribution, our distributions from equity investments were lower by $36 million or 19% in the quarter versus last year, of which approximately 60% was due to weakness in the national advertising market at TV Food Network, and the remaining 40% was related to a working capital investment in content. Looking ahead, we project corporate overhead exclusive of stock comp and transaction costs to be approximately $35 million in the second quarter, and we expect corporate overhead around $138 million-$140 million for the year. Non-cash comp is expected to be approximately $16 million for the second quarter and in the $67 million area for the full year, but will vary based on stock price and actual grants. For cash taxes, we use a 26.5% tax rate when calculating our estimated taxes before one-time and other adjustments. The second quarter includes two income tax payments. We are currently projecting net cash CapEx of $42 million in the second quarter and $145 million for the full year, including a portion of carryover CapEx from last year. We expect Nexstar's cash interest expense to approximate $110 million for the second quarter and $425 million for the full year, reflecting the current forward curve and our expectations for debt repayments. The for-forward curve currently shows interest rates peaking in June and falling thereafter. Turning to the balance sheet. Nexstar's outstanding debt at March 31st, 2023 was $6.92 billion, down slightly for the quarter as we made mandatory quarterly amortization payments of $31 million. Because we have designated The CW as an unrestricted subsidiary, the losses associated with The CW are not accounted for in our calculation of leverage for purposes of our credit agreement. As such, our net first lien covenant ratio for Nexstar excluding CW at March 31st, 2023 was 1.73 x, which is well below our first lien and only covenant of 4.25 x. Our total net leverage for Nexstar excluding CW at quarter end was 2.92x. As is typical in non-political years, we expect leverage, which we calculate on a last 12-month basis versus a two-year average, but not our quantum of debt to slightly tick up in 2023, but to fall again in 2024 political year. In 2023, we plan to allocate a portion of our free cash flow to reduce indebtedness primarily from mandatory amortization payments. Our cash balance was $413 million, a seasonally high level given timing of cash inflows and working capital requirements, and includes $49 million of cash related to The CW. For the quarter, we generated $383 million of attributable free cash flow. We returned $225 million or 59% of this attributable free cash flow to shareholders, paying $50 million in dividends and repurchasing $175 million of stock, which together mark a 15% increase over levels in the first quarter of 2022. As we move forward, we will continue to strategically deploy our cash in a manner that is consistent with our commitment to creating the highest shareholder value. On our prior call, we issued our guidance for our average annual attributable free cash flow for the 2023–2024 period. If we see a need to change this either up or down in the future, we will comment on that at that time. Nexstar's consistently strong free cash flow generation remains one of our most powerful differentiators and mechanisms for shareholder value creation. While you probably think we're a broken record saying this, at our current stock price, Nexstar shares are significantly undervalued. Our current stock price implies over a 3% dividend yield and over a 40% —or 20% free cash flow yield. Our 2023 and 2024 attributable free cash flow equates to over 40% of our current market cap, meaning at this rate, we generate cash flow equivalent to our entire market cap by mid-2027. Not only do we have belief in the consistency of our core cash flows, we have multiple organic growth drivers that will help us in the outer years, The CW, NewsNation, and ATSC 3.0. If you wanna learn more, I'm available to get you up to speed. This concludes the financial review for the call. Operator, can you please open the line for questions? Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Dan Kurnos with Benchmark. Please go ahead. Great, thanks. Good morning. Super strong results, guys. Maybe just, Perry, high level, just as you think about kind of the sports landscape, we've seen, you know, some of the peer group also start to add some names. You guys led the way with LIV TV acquisition, focus on independence. Just how do you think about kind of the broader opportunity for you here? Just how do we also think about the contribution thus far? You alluded to some incremental revenue synergies over time. Sure. I guess my first comment would be everything is old is new again. When I started in the business in the late 70s and obviously throughout the 80s and into the 90s, independent television was the home for broadcast sports, primarily across the country. It's interesting in the conversations we've had with team owners, league commissioners, broadcast television, because of its superior reach, is once again the belle of the ball. If you're only distributed via cable, you are missing a good portion of the marketplace. The conversations have been steady, and we continue to believe that they will yield results for Nexstar, additional results over time. It's kind of heartening to see that people are recognizing broadcast television as the superior reach vehicle. I would say as it relates to the LIV Golf addition to The CW, you know, our CW affiliates are selling the heck out of it. Because there's not really a network scatter market, the network is selling a modest amount, but the local stations are out billing the network in terms of advertising sales by a substantial margin at this point. That's for CW affiliates that were programming movies or syndication or paid programming, this is all new and incremental revenue to them. It's a net positive for the company that we think will grow over time. Got it. That's helpful. Tom, just on sort of distribution, I think you had guided previously the front half would be sort of mid-single digits and then accelerating from there, Q1 a little bit higher than mid-single digits to start the year. I don't know if you had included the incremental carriage agreements that you signed with the virtuals in that original guidance. Maybe that one housekeeping question is just kinda how we think about sort of the pace over the balance of the year given the initial Q1 outperformance. Well, I would say yes, Q1 was a good quarter, and our entire year's budget did include renewals of the vMVPD, so that was baked in there. We're not changing our guidance at this point with regard to overall retransmission revenue because we gave, you know, a range of potential outcomes, and we still believe that that is in the cards in, you know, in that range, even though the first quarter was a slight overperformance. We're pleased with where we are, but not, you know, so exuberant that we are prepared to change our guidance at this point. All right, fair enough. Good start to the year, guys. Thank you. Our next question comes from Craig Huber with Huber Research Partners. Please go ahead. Good morning. I got a big picture question on contracts. All this controversy out there that the trade press has picked up on for the vMVPDs and those contracts being done by the broadcast networks, as you know. Your preference and your peers' preference seems to be that you want to do them yourself like you do for the legacy MVPDs. When would that window sort of maybe open when the contracts would potentially come up for renewal, so you could actually maybe switch to that? I mean, how many years out do you think that could potentially be, so you could do those contracts yourselves? Virtual MVPD contract renewals generally have a contract tenure of two or three years. To the extent that a number of them were just renewed, I think that's probably going to be the window, absent a legislative act or something that might accelerate the process. I think that's a meaningful time to revisit the issue, you know, at the time of contract expiration. Okay. Also, can you help me with the retrans sub declines all -in, in the quarter? Was it down about mid-single digits year-over-year? Well, I think we gave the overall decline as low to mid-single digits, but that includes some addition of new carriage of some of our CW, MyNetwork and independent stations by virtual MVPDs. That's the contributing factor as to why our attrition actually went down slightly from the last quarter that we reported. On sort of an organic basis, sort of down mid-single digits, reasonable for us to expect? We haven't commented on that, but obviously it's, you know, if you think about legacy or, you know, same station, it would be, slightly lower than that low to mid-single digit attrition for the overall group. Okay. Thanks for that. Can you just give us a little bit more detail, if you would, on your second quarter core advertising pacings here, excluding the CW, sort of how that's tracking? Maybe talk about some of the categories that might be changing for the better or worse versus what you saw in the first quarter. Thank you. I would say that, second quarter core advertising pacing, you know, looks a lot like first quarter. I think that the national might be a point one or two behind or slower than first quarter at this point in time. Granted, we're, you know, we're only in the, you know, eighth day of May, ninth day of May. We are, I think, optimistic that our results are gonna be similar. The, you know, our digital revenue continues to pace positive. The network revenue, we just got a mid six-digit scatter buy in the past week from Procter & Gamble. You know, I think that there is no question that, you know, there are economic headwinds out there. On an all-in basis, you know, the core advertising revenue is probably pacing marginally worse than the first quarter results. Although, I think you'll see an uptick in political advertising revenue vis-à-vis expectations. Won't make up for all of it, you know, there are lots of puts and takes. Great. Thank you. Our next question comes from Jim Goss with Barrington Research. Please go ahead. All right. Thank you. I was wondering, with LIV Golf, you mentioned it's doing better than the prior programming, which probably isn't too surprising. Typically the CW Network would have pretty limited relationships in terms of a couple of hours of prime time each night for the most part. I was wondering if you could talk about what that relationship is with this, sort of newer programming on a different timeframe from the normal. Well, I would say that, you know, Dennis Miller and Brad Schwartz, who are heading up The CW in our programming efforts, as well as their very talented executives in scripted and unscripted, all of which are new, are talking to everybody in Hollywood. I think that was one of the most, more pleasant surprises following our takeover, is that, you know, when we responded, "Hey, the doors are open, let's talk about doing business," the community responded. I think it's in everybody's best interest that there is a, you know, viable, fifth network competitor out there. The community's responded. Again, our goal is to broaden the appeal of the network. You'll see, you know, everything from FBoy Island on the network to, you know, a series that was announced yesterday, a comedy called Son of a Critch with Malcolm McDowell as one of the primary leads. You know, we're trying to broaden the appeal, and we're trying to broaden the slate of programming as well. The full schedule will be announced on nine days from today, on May the 18th, with all the pieces in place. The good news is, on that schedule, there's only really two shows that will have any effect from the writers' strike. We'll be able to cover that off pretty easily. The bulk of our schedule will remain intact, which should give us a bit of a competitive advantage over those that are more dependent on scripted. Okay, thank you. One other thing, in terms of the retrans outlook, you've painted a pretty happy picture with your experience. I assume that the increase in distribution revenues from the MVPDs is a big offset. I'm wondering if there's any other offset in terms of your net value from any better bargaining power you might have with the broadcasting and streaming companies as they take more conservative outlook toward their own programming expenditures? Well, I'll comment, and then Tom can add in any details. You know, the streaming revenue as a percentage of our total distribution revenue is a low double-digit amount. You know, even though those are increases, that doesn't move the needle as much as contractual resets, subscriber attrition that has been less than projected internally, at least so far this year. Those are the primary puts and takes. The fact that we reset the economic relationship with 50% of our subscribers at the end of the year, providing, you know, driving the increase, you know, the 9% increase. That was in light of our partner stations, Mission and White Knight, not being carried on the two satellite providers, which is not an inconsequential deduct from our advertising revenue when compared to the history. Just to add to that, we do have 40% of our subscribers up this year. The majority of that is at the end of the year, but we'll see, you know, see that as an opportunity for growth in 2024. Also keep in mind that, you know, with the change in the programming of The CW and additional programming at The CW, such as LIV Golf, we think we're gonna bring added value to all of The CW affiliates. As those network affiliation agreements come up for renewal, we expect to have a conversation with them with regard to what the appropriate value is for CW going forward, given the changes and the additions we're making to The CW that, you know, as Perry mentioned, benefit the local CW affiliates meaningfully so far. We hope to be able to, you know, see that reflected in, increased affiliation fees going forward. All right. Thanks very much. Our next question comes from Benjamin Soff with Deutsche Bank. Please go ahead. Hey, guys. Thanks for the question. In the past, you've spoken about the fact that broadcast accounts for 40% or so of the pay TV viewership, but only receives about 30% of the total fees. Obviously that's a big tailwind when we think about your ability to get better pricing over time. I'm just wondering if there's an update on that breakdown following this latest round of renewals and kind of what timeframe you think we'll start to see that gap really start to close. Thanks. I think your percentages are a little out of whack. You know, we've said historically, broadcast gets, you know, 30% to 1/3 of aggregate viewing and has taken, you know, kind of a high teens percentage of the distribution revenue. That's the gap that we're obviously trying to close. I mean, that's industry information, and I don't know everybody else's results, so I can't give you an update on, you know, what the where the bid and the ask are in the industry. I can just say that we're very pleased with the renewals that we've contemplated and optimistic about the renewals we have ahead of us for 2023. Okay, thanks. Our next question comes from Steven Cahall with Wells Fargo. Please go ahead. Thanks. Maybe first, Tom, I was wondering if you could talk a bit more just about your overall advertising strategy. I think you've announced some new senior leaders in advertising this year. Between The CW and BestReviews and now the bigger schedule for NewsNation, there's just a lot more in the advertising portfolio. Maybe you can talk about when you go to market at the local level, how much you're looking to hold back from the upfront, and how you're using these different components to kind of focus on more growth and share gains. Sure. Lee Ann, on The CW, I think you said you've completed distribution deals that have effectively paid for it. Just wondering, you know, when we can expect maybe The CW to convert to a cash flow contributor. As we think about the reprogramming, you know, kinda what inning do you feel like we're in after what you've discussed for the 2023– 2024 season? Thanks. Well, I'll take the first question, Steve. Yes, we've added quite a bit from a national perspective with regard to our, you know, our sales team. You know, if you think back on Nexstar, it was very much, you know, case by case national sales. We had NewsNation, which is a three-year-old entity and really has become, you know, coming into its own over the last 18 months or so. We had The Hill, now we have The CW. We're putting all of those together and marketing those as a package for national advertisers. In addition to the fact that we, you know, we have stations that reach 68% of the population. We have an opportunity there to put together a, you know, a Nexstar network, if you wanna think about it that way, from a station perspective. That's really the avenue and where we're trying to make additional inroads that we haven't historically because we didn't have the assets really to put together a package for national advertisers. That's the primary growth driver and the market that we are attacking. We're in the middle of the upfront right now. I think those, you know, the decisions with regard to sales and inventory allocation, et cetera, are ongoing. I think, you know, in the next 60 days or so, I think we'll have a better feel exactly how we look at that with regard to the national products that we have. Obviously, the strength of our local sales force continues to be exhibited in the results that we're putting up from a local perspective and use that as a funnel as well for multi-market deals up to national with regard to advertisers that are looking to do regional buys and sectional buys with regard to our products. With that, I'll turn it over to Lee Ann to talk a little bit more about, you know, the trajectory of things. Thanks, Tom. The CW, I think we've said a few times when we bought the company, we had the 2022–2023 broadcast season was already programmed. That was all of the programming that is currently generating those losses. That'll stay in place until, unfortunately, the end of the third quarter of this year. The fourth quarter will be the first period where we can really kind of program that on our own. This is really gonna be the 2023–2024 broadcast season, and it's really of a transition, right? We're putting in, we have a couple one carryover commitment, All American, coming into the next broadcast season, but we'll really be able to put on that kind of our new slate, and it's really our transition sort of broadcast period of moving to kind of the Nexstar way of doing things. We're still anticipating that we'll achieve profitability by 2025. That's still the current plan, and we'll just have to see how things unfold. We're, you know, we're happy about it. You know, we really got those additional distribution revenue that earlier than we thought we ever would've, which really helps pay for this pay for the investment. Thanks. Just a quick follow-up, just on allocation. You know, your leverage is about the lowest level it's been in a while. You've talked about how underpriced you think the stock is. Would you ever consider sort of holding leverage steady through the non-political years to buy back more stock and smooth it out? Or should we expect the buyback to more sort of track, where free cash flow is, i.e., a little less buyback in the odd years, and then obviously accelerated in the even years with political? Thank you. Yeah, look, I think, you know, for now our plan is to just spend the free cash flow as we get it. That means either doing that by paying down debt, paying our dividends, buying back stock, or making, you know, strategic investments. I think, you know, as we kind of evolve and delever more, you know, we'll obviously always look to do what is the best for the shareholders, so we can, you know, revisit any of those thoughts in the future. For right now, the plan is to execute on, you know, the spending the free cash flow as it comes. Thank you. Our next question comes from Barton Crockett with Rosenblatt Securities. Please go ahead. Okay. Thanks for taking the question. I was curious about wanting to make sure we understand The CW footprint and how that's evolving. You know, there obviously you guys are buying the San Diego station and talking about a transition. I think that CBS was in the news with plans to transition off of The CW for some of their stations, which I think are in some major markets. Could you give us an update on, you know, the reach of The CW and what you expect in terms of transition from, you know, the CBS stations and maybe others, and how that plays out over time? Sure. Well, I mean, let's start with the fact that the CW has the same population reach that Fox, ABC, NBC, and CBS do. We all reach 130+ million television households. Everyone is on parity there from a distribution perspective. We knew at the time of acquisition that CBS did not intend to renew The CW affiliation for their own CW affiliates at the end of this season. We went with their timetable as when they wanted to make a public announcement internally and externally, which was obviously this past week. The good news is we have multiple expressions of interest for affiliations in virtually every market. Nexstar has stations that could be easily converted to CW affiliates in three of those markets. We do not anticipate any issue. In fact, in a couple of markets we have. It's too strong to call it a bidding war because the discussions haven't progressed that far, but multiple expressions of interest, people recognize the value of having The CW affiliation versus having no affiliation. You know, that will ultimately help us to drive, you know, price and terms in new affiliation agreements. We see this as an opportunity both to upgrade the station group, as well as improve its financials as it relates to the network. Okay, thank you for that. Then one other thing. I was hoping you could give us an updated view on the progress or the expected timing for material commercialization of ATSC 3.0. You know, what you think is the likely kind of road for moving off of the requirement for dual broadcasting the legacy, I guess 1.0, and when you would be able to go just purely kinda 3.0. Does there need to be like an antenna subsidy, work with an FCC mandate? You know, how does that kinda happen? Well, I think these are all things that will be discussed in this public-private partnership to advance the advancement, if you will, of ATSC 3.0. Chairperson Rosenworcel committing to this partnership very much like the analog to digital transition, which was a industry and FCC partnership to basically define the rules of the road and advance that. Obviously, those are important things that have to happen, you know, for us to be able to activate spectrum in a material way. We will ultimately have to do away with the 1.0 simulcast requirement, which means there has to be an ability to receive a 3.0 signal. You know, many new sets, all of the Sony TV sets being manufactured, have a 3.0 receive capability in them. For older sets, there will have to be some sort of commercial solution so that people who are not part of an MVPD universe can receive their current programming. I think there are commercial opportunities to solve that. These are all things that need to be considered. You know, the simple fact of establishing a sunset of 1.0 period would incent set manufacturers to build to the new standard sooner as opposed to later. All of these things go into the discussion of, you know, how we transition from 1.0 to 3.0. We have to put the consumer first. I think, you know, we do that, everything else will kinda fall into place rapidly behind that. You know, we're still optimistic that this year we will sign some sort of a commercial test case, use case for certain applications of our 3.0 spectrum. It will not be a huge financial contributor, but it'll be more of a proof of concept for certain verticals and maybe more than one. You know, we think that things, you know, will begin to roll this year and pick up momentum. We've said by the end of the decade is when we expect, you know, ATSC 3.0 spectrum to meaningfully contribute to our financial profile. Okay, great. Thank you. Our next question comes from Nick Zangler with Stephens. Please go ahead. Yeah. Hey, guys. Just, you know, back to that premium sports opportunity, given some recent announcements, how attractive would you say this content is to you? Like, would you characterize the opportunity as strategic priority number 1? You know, when you think about these potential arrangements, you know, Is there an opportunity for the advertising revenues that you generate against the games themselves to generate a profit, or is it really, you know, the shoulder programming, like the pre-game and post-game shows that really represent, I guess, the most lucrative aspect of the sports partnerships? Just curious how those might be arranged. Well, listen, you know, having done retrans negotiations for over 20 years, the thing that drives economics and retrans are live news and live sports. You know, there are other things that contribute, but those are the primary drivers. If you have them, I think you're advantaged over not having them. You know, the deals that we would do would be to make money on the advertising from the get-go. Shoulder programming would be a way to enhance that value, but we would not take the position that sports over the life of a contract would be a loss leader to accomplish other goals. I mean, you know, we will find a way to make money, or we probably won't do the deal. The good news is, I think at the local station level, it greatly enhances our offerings in the local community. At the network level, it's basically table stakes. I think you'll see us continue to explore those opportunities at both the national and the local level, as broadcast is in vogue once again. For some of us, it never fell out of vogue, but, you know, it's in vogue in terms of a distribution mechanism and a way to achieve superior reach to streaming and traditional MVPD, you know, relationships. I mean, I would imagine that, you know, the sports content opportunity is likely significant for Nexstar specifically across the broadcast group, just given your geographic footprint, number one. I mean, obviously, I'm just wondering if you'd agree. Then when you do go to market, and when you're having these conversations, you know, to win these sports deals, how do you market yourself, I guess, relative to the peer group? Does The CW's national presence actually provide a pretty strong advantage to you somehow, you know, as these conversations are occurring? Well, each of the conversations I think are individual. I think you're right, given the geographic location of our stations in major markets with sports teams is a plus. The fact that we have CW affiliates or independent stations or My Network affiliates in the top 10 markets, with the exception of two, we've got more shelf space. It's kind of hard to do a basketball or baseball deal with a big three affiliate, maybe even big four affiliate, because of the amount of inventory that is claimed already in those affiliation agreement. Yeah, I would think that, you know, we have a good shot at activating these, you know, much like we did with the Clippers in Los Angeles. That's a CW affiliate. We were able to clear, you know, 15 games. I can tell you that it was a financial success for KTLA, and we're in discussions on renewal as we speak. Great. Great. Much appreciated. Thanks, guys. Our next question comes from Alan Gould with Loop Capital. Please go ahead. Yeah, thanks for taking the question. Perry, just to drill down a little more on the sports rights and the pricing of the sports rights. The teams got used to some pretty high fees from the RSNs, which obviously turned out to be unsustainable. You know, what is the tone like in these contract negotiations? Well, of course, they want the money they've been paid and superior reach and anything else they can ask for. I think the reality is that there will likely be a step down in economics, but that may transfer into other things in terms of increased reach might entice, you know, better attendance at the gate. Listen, I think every sports owner is gonna go through this in real time, and every league commissioner is gonna go through this in real time. You know, there's a reason the RSNs, you know, are in bankruptcy because that business model is not sustainable. I think everybody gets it. It's just now, you know, what is the new world order, which I think includes broadcast. I think there'll still be RSNs, but I think they'll be much smaller in terms of the amount of programming that they have from a particular team or league. There'll still be cable, but I think, you know, none of this is zero-sum. I think you'll see broadcast with a traditional approach. You know, perhaps even streaming and, you know, trying to meet the customer where they are. The good news is that, you know, we see broadcast being a part of that, both at the local level and potentially at the national level. Perry, on the revenue side, RSN had some of the highest cable affiliate fees. Yeah, how close could this bring an independent or The CW station to the kind of retrans fees that you're getting from a big four network station? Well, it'll certainly help on it. Okay. One for Lee Ann. Should we assume CW losses decline sequentially for the rest of the year based on Nexstar's management and then obviously start improving 4Q once you change the programming? Yeah. Fourth quarter should be better than the other quarters in the year. Should we assume 2Q, 3Q, 4Q decline sequentially from the $75 million losses that you just reported? By sequentially. I mean, we still have all of the programming, in place that is related to the, you know, the expensive programming through the end of the broadcast season. You know, we'll still see losses in Q2 and Q3. Q4 should be better. I'm not sure what you mean by sequentially. Maybe we can chat offline, and we can give a little more color on that, what you're looking for. Okay, thanks, Lee Ann. There are no further questions at this time. I would now like to turn the floor back over to Perry Sook, Chairman and Chief Executive Officer, for closing comments. Well, thank you very much for joining us today. We continue to execute against our plan, taking the necessary actions and making the required investments to shape the future of Nexstar and to continue to deliver long-term growth and industry outperformance. In the face of economic uncertainty, we believe that Nexstar remains an attractive investment with higher quality factors, including stable earnings, robust free cash flow generation, return of capital to shareholders, and higher credit quality at a reasonable valuation. Thanks, everyone, for joining us today. Looking forward to speaking with you again when we report our second quarter results in about 90 days. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.