2015 Annual Report
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NexstarBroadcastingGroupStations(1) Market Market Rank Market Station Affiliation Rank Market Station Affiliation (2) 7 DC /Hagerstown,MD WHAG NBC121 Lafayette,LA KADN FOX 12 Phoenix,AZ KASW TheCW126 Bakersfield,CA KGET NBC 34 SaltLakeCity,UT KTVX ABC 128 LaCrosse,WI WLAX FOX KUCW TheCW WEUX FOX 40 LasVegas,NV KLAS CBS 131 Amarillo,TX KAMR NBC 47 Jacksonville,FL WCWJ TheCW KCIT FOX 50 Memphis,TN WATN ABC 136 Rockford,IL WQRF FOX WLMT TheCW WTVO ABC 54 Fresno,CA KSEE NBC 137 Monroe,LA KARD FOX KGPE CBS KTVE NBC 55 WilkesͲBarre,PA WBRE NBC 139 BismarckͲMinot,ND KXMA CBS WYOU CBS KMXB CBS 57 LittleRock,AR KARK NBC KXMC CBS KARZ MyNetworkTV KMXD CBS KLRT FOX 144 Lubbock,TX KLBK CBS KASN TheCW KAMC ABC 67 Charleston,WV WOWK CBS 145 Midland,TX KMID ABC 68 GreenBay,WI WFRV CBS KPEJ FOX 69 Roanoke,VA WFXR FOX 147 WichitaFalls,TX KFDX NBC WWCW TheCW KJTL FOX 72 DesMoines,IA WOI ABC 149 SiouxCity,IA KCAU ABC KCWI TheCW 150 Erie,PA WJET ABC 75 Springfield,MO KOLR CBS WFXP FOX KOZL MyNetworkTV 151 Joplin,MO KSNF NBC 76 Rochester,NY WROC CBS KODE ABC 79 Huntsville,AL WZDX FOX 154 PanamaCity,FL WMBB ABC 83 Shreveport,LA KTAL NBC 155 TerreHaute,IN WTWO NBC KMSS FOX WAWV ABC KSHV MyNetworkTV 157 Wheeling,WV WTRF CBS 84 Syracuse,NY WSYR ABC 159 Binghamton,NY WIVT ABC 85 Champaign,IL WCIA CBS 160 Beckley,WV WVNS CBS WCIX MyNetworkTV 165 Abilene,TX KTAB CBS 86 Brownsville,TX KVEO NBC KRBC NBC 87 WacoͲBryan,TX KWKT FOX 167 Billings,MT KSVI ABC KYLE MyNetworkTV KHMT FOX 92 ElPaso,TX KTSM NBC 169 Clarksburg,WV WBOY NBC 93 BatonRouge,LA WGMB FOX 172 Utica,NY WFXV FOX WVLA NBC WUTR ABC 98 Burlington,VT WFFF FOX 173 Dothan,AL WDHN ABC WVNY ABC 175 Elmira,NY WETM NBC 100 Fayetteville,AR KFTA FOX/NBC 176 Jackson,TN WJKT FOX KNWA NBC/FOX 177 Watertown,NY WWTI ABC 101 QuadCities,IL WHBF CBS 179 Alexandria,LA WNTZ FOX KGCW TheCW 180 Marquette,MI WJMN CBS KLJB FOX 185 GrandJunction,CO KREX CBS 103 Evansville,IN WEHT ABC KREG CBS WTVW TheCW KREY CBS 104 Altoona,PA WTAJ CBS KFQX FOX 109 TylerͲLongview,TX KETK NBC 198 SanAngelo,TX KSAN NBC KFXK FOX KLST CBS 111 Ft.Wayne,IN WFFT FOX 201 St.Joseph,MO KQTV ABC 117 Peoria,IL WMBD CBS WYZZ FOX (1) Includesstationsthatweown,operate,orprovideservicestounderlocalserviceagreementsincludingtimebrokerageagreements,sharedservicesagreements,jointsales agreementsandoutsourcingagreements. (2) WHAGservestheHagerstown,MDsubͲmarketwithintheDMA.ItssignaldoesnotreachtheentireWashington,DCmarket. May5,2016 DearFellowShareholders: Fiscal2015markedanotheryearofsignificantgrowthandaccomplishmentforNexstarastheongoing success of our strategies to leverage our local market programming, content and community involvementdroveourfourthconsecutiveyearresults.Nexstar’s2015freecashflowpershareroseto approximately$6.70,markinga29%increaseover2014freecashflowpershareof$5.19.Additionally, basedonNexstar’srecord2015results,ourfreecashflowhasgrownatacompoundannualgrowthrate of approximately 37% from 2006 through 2015. With our significant and growing free cash flow, we returned over $2.34 per share to shareholders in 2015 through quarterly cash dividends and opportunisticsharerepurchaseswhileloweringourleverageratiofromtheyearͲend2014level. Nexstar was founded nearly two decades ago with one television station in Scranton, Pennsylvania, basedonacommitmenttodeliverexceptionalservicetothelocalcommunitieswhereweoperate.To thisday,thisfocushasbeenfundamentaltooursuccessaswe’vegrowntoown,operate,orprovide services to 104 television stations in 62 markets.Since 2011, Nexstar has completed seventeen accretive strategic transactions including 60 full power TV stations and four digital businesses, which haveincreasedourscaleanddiversifiedourstationportfoliogeographicallyandbymarketsizewhile presentingsignificantoperatingandfinancialsynergiesandexpandingourfreecashflowgrowth.Our proven ability to extract value from acquisitions is reflected by Nexstar’s financial growth over this periodasnetrevenuegrewfrom$306.5millionin2011to$896.4millionin2015,whilefreecashflow rosefrom$34.2millionto$208.2millioninthatsametimeframe. NEXSTARBROADCASTINGGROUP2015HIGHLIGHTS Fourthconsecutiveyearofrecordfinancialresults - Netrevenuerose42.0%to$896.4million o BroadcastadrevenueͲͲinclusiveoflocal,nationalandpoliticalͲͲgrew18.1%to$535.6million o Retransmissionfeerevenueimproved92.3%to$298.0million o Digitalrevenueincreased92.5%to$89.9million - Broadcastcashflowgrew29.7%to$350.0million - AdjustedEBITDAincreased30.0%to$305.1million - Freecashflowrose30.4%to$208.2million Continuedfinancialdiversification - NonͲTVspotrevenue(excludingpolitical)rose90.8%to$393.3million o NonͲTVspotrevenue(excludingpolitical)comprised40.3%oftotalgrossrevenuein2015rising from29.8%in2014and24.7%in2013 o Approximately 45% of 2015 adjusted EBITDA was generated by revenue sources other than broadcastadvertising,upfrom40%in2013 EnteredintoaccretivetransactionstoacquireeightTVstations - Though the transaction will close later in 2016, Nexstar is already operating four stations with leadingrevenuesharesinWestVirginiapursuanttoatimebrokerageagreementwhiletheother transaction,whichclosedearlierin2016,addedfourstationswiththeleadingrevenueshareinthe fastgrowingMinotͲBismarckͲDickinsonͲWilliston,NorthDakotamarket. Announced, completed and integrated accretive acquisitions of a leading local digital video advertisingandprogrammatictechnologycompanyandamachinelearningandmobileadvertising technologyplatform - ThedigitalacquisitionsbroughtNexstarapioneerinadtechnologyfocusedontheprogrammatic deliveryoflocationfocused,targetedvideocampaignswhichallowadvertisersandagenciestoplan, buy,measure,andoptimizetheiradcampaignsinrealtimeandaleadingadtechnologyplatform thatleveragesproprietarymachinelearningtechnologytooptimizeanddrivenewmobilerevenue streamsforcontentpublishers Successfulintegrationof19TVstationsacquiredinaccretivetransactions - The operating results from these stations are benefitting from Nexstar’s local community focus, groupͲwideretransmissionconsentagreementsandhyperͲlocaldigitalstrategies - Nexstarisrealizingtheanticipatedsynergiesandefficienciesforecastedatthetimethetransactions wereannounced LaunchedanewNBCaffiliateinLafayette,LAandanewMyNetworkaffiliateinWaco,TXusing existingspectrumassets EffectiverenewalofmultiͲyearretransmissionconsentagreementswithourdistributionpartners - 2015 renewals represent approximately 45% of the cable, direct broadcast satellite or telco subscribersinNexstarmarkets - Allrenewalswereatmorefavorableratesaswecontinuetoclosethevaluegapbetweenaudience viewershipoftheCompany’sprogrammingandcontentandthedistributionrevenueitreceives OngoingexpansionofNexstar’sproductionofleadinglocalnews,communityandlifestyle programmingandlocaloperations - LaunchedadditionallocalnewscastsinRoanoke,VA;Shreveport,LA;Champaign,IL;QuadCities,IA; Evansville,IN;Tyler,TX;Peoria,IL;Monroe,LA;Midland,TX;and,GrandJunction,CO - CompletedstationfacilityconstructionandreͲlocationsinRoanoke,MidlandͲOdessa,QuadCities, PhoenixandShreveport - We now produce over 90,000 hours annually of local news, weather, sports and local lifestyle programming(orover1,700hoursoflocalcontentperweek) - Nexstar’s local news ranks among top 2 in approximately twoͲthirds of our markets and we’ve garnerednearly500broadcastingandjournalismawardsoverthelastsixyearsforoutstandinglocal newsprogrammingandlocalcommunityservice Issued$275millionof6.125%CouponSeniorNotesmaturing2022 - Proceeds were used to fund the Las Vegas and Phoenix station acquisitions and the Yashi digital transaction Reducedweightedaveragecostofborrowingstoapproximately5.0%atDecember31,2015from approximately5.2%atDecember31,2013(thelastnonͲpoliticalcycle) Reducednetleveragecovenantratioto4.32xatDecember31,2015from4.40xatDecember31, 2014despitethe$51.6millionreductioninpoliticalrevenueduetothecycle,whilefundinggrowth initiativesandreturningcapitaltoshareholders Returnedover$2.34persharetoshareholdersin2015throughquarterlycashdividendsand opportunisticsharerepurchases - In2015,theCompanyrepurchasedapproximatelyonemillionsharesofitsClassAcommonstockat an average purchase price of approximately $48.15 per share, funded from cash flow from operations In late January 2016, we entered into a definitive agreement to acquire Media General in what we believe is a transformative and strategically and financially compelling growth opportunity. The transaction is expected to increase Nexstar’s broadcast portfolio by approximately two thirds, more thandoubleouraudiencereach,add15newtopͲ50DMAsandoffersynergiesrelatedtotheincreased scaleofthecombineddigitaloperations. Theresultingentity,tobenamedNexstarMediaGroup,isexpectedtobeoneofthenation’sleading providersoflocalnews,entertainment,sports,lifestyleandnetworkprogrammingandcontentthrough its broadcast and digital platform with annual revenue in excess of $2.3 billion and 171 full power television stations in 100 markets, including largeͲscale reach to nearly 39% of all U.S. television households.FormoreinformationregardingtheMediaGeneralacquisition,pleaseseethejointproxy statement/prospectusenclosedwiththisletter. Nexstar’s onͲair, online and mobile platforms deliver the reach and influence local businesses need. With television and digital properties serving local communities across the United States, advertisers andbrandmanagerstrustNexstartodeliverresultsͲorientedmultiplatformmarketingsolutions.With expanded broadcast and digital operations, significant and growing free cash flow, a stable capital positionandsolidvisibilityon2016growth,weareconfidentofourapproachtoenhancinglongͲterm