NEXSTAR BROADCASTING GROUP, INC. (Exact Name of Registrant As Specified in Its Charter) Delaware 23-3083125 (State of Organization Or Incorporation) (I.R.S
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Nexstar Broadcasting Group Stations Market (1) Rank Market Station Major Affiliation Status (2) 8 Washington, DC/Hagerstown, MD WHAG NBC O&O 33 Salt Lake City, UT KTVX/KUCW ABC O&O 43 Harrisburg-Lancaster-Lebanon-York, PA WLYH The CW O&O 48 Jacksonville, FL WCWJ The CW O&O 50 Memphis, TN WATN/WLMT ABC O&O 54 Wilkes Barre-Scranton, PA WBRE NBC O&O WYOU CBS LSA 55 Fresno-Visalia, CA KSEE/KGPE NBC/CBS O&O 56 Little Rock-Pine Bluff, AR KARK/KARZ NBC O&O KLRT/KASN FOX LSA 70 Green Bay-Appleton, WI WFRV CBS O&O 72 Des Moines-Ames, IA WOI ABC O&O 75 Springfield, MO KOLR CBS LSA KOZL Independent O&O 78 Rochester, NY WROC CBS O&O 82 Shreveport, LA KTAL NBC O&O 84 Champaign-Springfield-Decatur, IL WCIA/WCIX CBS O&O 85 Syracuse, NY WSYR ABC O&O 98 Burlington-Plattsburgh, VT WFFF FOX O&O WVNY ABC LSA 100 Davenport-Rock Island-Moline, IL WHBF CBS O&O 101 Ft. Smith-Fayetteville-Springdale-Rogers, AR KFTA/KNWA FOX/NBC O&O 103 Johnstown-Altoona, PA WTAJ CBS O&O 104 Evansville, IN WEHT ABC O&O WTVW The CW LSA 109 Ft. Wayne, IN WFFT FOX O&O 117 Peoria-Bloomington, IL WMBD CBS O&O WYZZ FOX LSA 127 Bakersfield, CA KGET/KKEY-LP NBC O&O 130 Amarillo, TX KAMR NBC O&O KCIT/KCPN-LP FOX LSA 136 Rockford, IL WQRF FOX O&O WTVO ABC LSA 137 Monroe, LA-El Dorado, AR KARD FOX O&O KTVE NBC LSA 143 Lubbock, TX KLBK CBS O&O KAMC ABC LSA 144 Wichita Falls, TX-Lawton, OK KFDX NBC O&O KJTL/KJBO-LP FOX LSA 147 Sioux City, IA KCAU ABC O&O 149 Erie, PA WJET ABC O&O WFXP FOX LSA 150 Odessa-Midland, TX KMID ABC O&O 152 Joplin, MO-Pittsburg, KS KSNF NBC O&O KODE ABC LSA 155 Terre Haute, IN WTWO NBC O&O WAWV ABC LSA 159 Binghamton, NY WBGH/WIVT NBC/ABC O&O 165 Abilene-Sweetwater, TX KTAB CBS O&O KRBC NBC LSA 168 Billings, MT KSVI ABC O&O KHMT FOX LSA 171 Utica, NY WFXV/WPNY-LP FOX O&O WUTR ABC LSA 172 Dothan, AL WDHN ABC O&O 174 Elmira, NY WETM NBC O&O 176 Watertown, NY WWTI ABC O&O 177 Jackson, TN WJKT FOX O&O 180 Marquette, MI WJMN CBS O&O 198 San Angelo, TX KSAN NBC LSA KLST CBS O&O 200 St. Joseph, MO KQTV ABC O&O (1) O&O refers to stations that we own and operate. LSA, or local service agreement, includes time brokerage agreements, shared services agreements, joint sales agreements and outsourcing agreements. (2) WHAG serves the Hagerstown, MD sub-market within the DMA. Its signal does not reach the entire Washington, D.C. market. April 30, 2014 Dear Fellow Shareholders: In late 2013 Nexstar marked its tenth year as a public company and as our annual report cover illustrates, we celebrated the anniversary by opening the NASDAQ exchange. 2013 was also another active and successful year of growth and significant accomplishment for Nexstar as we again generated record financial results by every metric. Throughout the year, we successfully integrated eighteen acquired stations and Inergize Digital into our operations and announced accretive transactions to strategically expand our operating base by an additional 37 stations. In addition, we strengthened our balance sheet and lowered our weighted average cost of borrowings and began paying shareholders a quarterly cash dividend. Our leading local news and content franchises as well as broadcast television’s role as the most influential medium among consumers remain the foundation of our strategies for continued long term growth. In the past two years, we have closed or announced transactions for a total value of $862 million effectively doubling the size of our television station portfolio. Upon completing all announced transactions our platform will expand to 108 television stations making Nexstar the second largest operator of television stations in the United States. Our combined audience reach will be approximately 16% of U.S. television households, allowing for significant expansion of our platform while remaining under the current 39% regulatory cap. NEXSTAR BROADCASTING GROUP 2013 HIGHLIGHTS Record financial results - Net revenue rose 32.7% to $502.3 million o Local and national core revenue growth of 42.3% to $378.8 million o Retransmission fee revenue improved 66% to $101.1 million o Digital Media revenue increased 68.0% to $30.8 million - Broadcast cash flow(1) grew 12.9% to $193.0 million - Adjusted EBITDA(1) increased 13.9% to $166.7 million - Free cash flow(1) growth of 5.5% to $84.9 million Continued financial diversification - Non-TV spot revenue (excluding political) comprised 30.4% of total gross revenue in 2013 compared with 25.5% in 2012 and 25.0% in 2011 - Approximately 40% of 2013 Adjusted EBITDA was generated by revenue sources other than broadcast advertising Further expansion of Nexstar’s production of local news, community and lifestyle programming - We now produce over 68,000 hours annually of local news, weather, sports and local lifestyle programming Successful integration of accretive acquisitions of 18 TV stations in 11 markets and the Inergize Digital media platform - The operating results from these stations are benefitting from Nexstar’s local community focus, group- wide retransmission consent agreements and hyper local digital media strategy - We expanded the Company’s proven digital media model and combined “best of class” practices from Nexstar’s existing digital media operations with those of Inergize Digital to deliver fully-integrated digital solutions for Nexstar stations and our on-air, online and mobile advertising clients Entered into accretive transactions to acquire 37 TV stations - The new stations will diversify and/or complement Nexstar’s existing station portfolio in terms of geographic fit and market size while expanding our presence and opportunities for regional hub efficiencies in ten states where we already operate - Upon completing all pending transactions Nexstar’s platform will expand to 108 stations and will reach 16% of US TV households - Pending transactions are expected to close during 2014 Reduced average cost of borrowings to approximately 5.2% at December 31, 2013 from approximately 6.6% at December 31, 2012 - Pro forma for the completion of all announced transactions and their associated financings, Nexstar’s weighted average cost of debt is expected to decline to approximately 5.0% - Reduced net leverage ratio to 5.8x at December 31, 2013 from 6.2x at December 31, 2011 Returned $22.7 million of capital to shareholders in 2013 in the form of share repurchases and payment of cash dividends - Repurchased 365,384 shares of the Company’s Class A common stock for $8.4 million - Paid quarterly cash dividends of $0.12 per share in 2013 totaling $14.3 million Successful renewal of multi-year retransmission consent agreements with our distribution partners - 2013 renewals represent approximately 22% of the cable, direct broadcast satellite or telco subscribers in Nexstar markets and all were concluded with no service interruptions - All renewals were at more favorable rates as we continue to close the value gap between audience viewership of the Company’s programming and content and the distribution revenue it receives FOCUS ON LOCALISM AND EXPANDED BROADCAST AND DIGITAL MEDIA PLATFORMS TO DRIVE RECORD 2014 RESULTS As noted earlier, our local content franchises combined with broadcast television’s mass reach and influence remains the foundation of our strategies for continued long-term growth. Our growth is a function of our ability to carefully structure accretive M&A transactions combined with the consistent approach we take toward elevating the level of service provided to local communities in the markets we serve. To accomplish this, we allocate meaningful capital investments to expand local news, lifestyle, sports, weather and other programming while enhancing station infrastructure, facilities, production resources and technologies. Our station managers are members of the local communities where we operate and our sales professionals interact daily with local businesses to develop effective advertising and marketing opportunities, partnerships and solutions. These factors highlight Nexstar’s emphasis on localism and represent a significant point of differentiation relative to other media. As such, we continue to pursue acquisition targets that adhere to our criteria for the development of new strong local platforms and financial accretion as at present, this represents the best and highest value approach to deploying our growing free cash flow. NEXSTAR BROADCASTING GROUP 2014 OUTLOOK AND RECENT EVENTS Board of Directors approved a 25% increase in quarterly cash dividend to $0.15 per share effective with the dividend paid in February 2014 - The increase reflects the growing free cash flow generated by Nexstar’s diversified media platform while providing sufficient liquidity to reduce leverage, consider additional accretive station acquisitions and undertake other initiatives to enhance long-term shareholder value Acquired Internet Broadcasting, a leading digital publishing platform and digital agency in a strategic and accretive transaction - A pioneer of innovative technology and services for the broadcast media industry, Internet Broadcasting Systems offers a suite of fully scalable digital solutions, an innovative SaaS-based digital publishing platform, original and syndicated content, and one of the largest digital advertising agencies that provides full life-cycle advertising and sales operations solutions - The acquisition marks Nexstar’s entry into the profitable and fast-growing digital agency business and broadens Nexstar’s digital media portfolio with technologies that are complementary to our existing digital businesses and multi-screen