2018 Annual Report
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Nexstar Media Group Stations(1) Market Market Market Rank Market Station Affiliation Rank Market Station Affiliation Rank Market Station Affiliation 6 DC(2)/Hagerstown, MD WDVM Independent 66 Honolulu, HI KHON FOX 115 Sioux Falls, SD KELO CBS 8 San Francisco, CA KRON MNTV KHAW FOX KDLO CBS 11 Tampa, FL WFLA NBC KAII FOX KPLO CBS WTTA MNTV KGMD MNTV 121 Lafayette, LA KLFY CBS 12 Phoenix, AZ KASW The CW KGMV MNTV 122 Bakersfield, CA KGET NBC 22 Portland, OR KOIN CBS KHII MNTV 125 Youngstown, OH WKBN CBS 25 Raleigh, NC WNCN CBS 67 Green Bay, WI WFRV CBS WYTV ABC 127 Columbus, GA WRBL CBS 27 Nashville, TN WKRN ABC 68 Roanoke, VA WFXR FOX 28 Indianapolis, IN WISH The CW WWCW The CW 130 La Crosse, WI WLAX FOX WNDY MNTV WEUX FOX 70 Charleston, WV WOWK CBS 131 Amarillo, TX KAMR NBC 30 Salt Lake City, UT KTVX ABC 72 Springfield, MO KOLR CBS KCIT FOX KUCW The CW KOZL MNTV 137 Monroe, AR KARD FOX 33 New Haven, CT WTNH ABC KRBK FOX WCTX MNTV KTVE NBC 75 Des Moines, IA WOI ABC 34 Columbus, OH WCMH NBC 139 Rockford, IL WQRF FOX KCWI The CW WTVO ABC 38 Spartanburg, SC WSPA CBS 76 Wichita, KS KSNW NBC WYCW The CW 141 Topeka, KS KSNT NBC KSNC NBC 39 Las Vegas, NV KLAS CBS KTKA ABC KSNG NBC 40 Austin, TX KXAN NBC 142 Midland, TX KMID ABC KSNK NBC KBVO MNTV KPEJ FOX KNVA The CW 78 Brownsville, TX KVEO NBC 143 Lubbock, TX KLBK CBS 41 Harrisburg, PA WHTM ABC 79 Huntsville, AL WZDX FOX KAMC ABC WHDF The CW 43 Birmingham, AL WIAT CBS 146 Minot-Bismarck, ND KXMA The CW 80 Rochester, NY WROC CBS 44 Portsmouth, VA WAVY NBC KXMB CBS WVBT FOX 81 Syracuse, NY WSYR ABC KXMC CBS 47 Albuquerque, NM KRQE CBS 82 Champaign, IL WCIA CBS KXMD CBS KREZ CBS WCIX MNTV 148 Wichita Falls, TX KFDX NBC KBIM CBS 85 El Paso, TX KTSM NBC KJTL FOX KASY MNTV 89 Waco-Bryan, TX KWKT FOX 149 Sioux City, IA KCAU ABC KYLE MNTV KRWB The CW 150 Panama City, FL WMBB ABC 90 Shreveport, LA KTAL NBC KWBQ The CW 151 Erie, PA WJET ABC 49 Grand Rapids, MI WOOD NBC KMSS FOX WFXP FOX WOTV ABC KSHV MNTV 153 Joplin, MO KSNF NBC 51 Memphis, TN WATN ABC 91 Colorado Springs, CO KXRM FOX KODE ABC WLMT The CW 92 Jackson, MS WJTV CBS 158 Terre Haute, IN WTWO NBC 52 Buffalo, NY WIVB CBS 93 Savannah, GA WSAV NBC WAWV ABC WNLO The CW 94 Charleston, SC WCBD NBC 160 Binghamton, NY WIVT ABC 53 Providence, RI WPRI CBS 95 Florence, SC WBTW CBS 162 Wheeling, WV WTRF CBS 96 Burlington, VT WFFF FOX WNAC FOX 163 Beckley, WV WVNS CBS WVNY ABC 54 Fresno, CA KSEE NBC 165 Abilene, TX KTAB CBS KGPE CBS 97 Baton Rouge, LA WGMB FOX KRBC NBC 56 Richmond, VA WRIC ABC WVLA NBC 167 Billings, MT KSVI ABC 57 Little Rock, AR KARK NBC 98 Quad Cities, IL WHBF CBS KHMT FOX KARZ MNTV KGCW The CW 168 Hattiesburg, MS WHLT CBS KLRT FOX KLJB FOX 169 Utica, NY WFXV FOX KASN The CW 101 Fayetteville, AR KFTA FOX WUTR ABC KNWA NBC 58 Mobile, AL WKRG CBS 170 Clarksburg, WV WBOY NBC 102 Tri-Cities, TN-VA WJHL CBS WFNA The CW 171 Rapid City, SD KCLO CBS 103 Evansville, IN WEHT ABC 59 Albany, NY WTEN ABC 173 Dothan, AL WDHN ABC WTVW The CW WXXA FOX 176 Elmira, NY WETM NBC 104 Ft. Wayne, IN WANE CBS 60 Knoxville, TN WATE ABC 177 Jackson, TN WJKT FOX 105 Augusta, GA WJBF ABC 62 Wilkes Barre, PA WBRE NBC 178 Watertown, NY WWTI ABC 106 Altoona, PA WTAJ CBS WYOU CBS 179 Alexandria, LA WNTZ FOX 64 Dayton, OH WDTN NBC 107 Greenville, NC WNCT CBS 182 Marquette, MI WJMN CBS WBDT The CW 108 Springfield, MA WWLP NBC 187 Grand Junction, CO KREX CBS 110 Lansing, MI WLNS CBS KREY CBS WLAJ ABC KFQX FOX 113 Peoria, IL WMBD CBS 196 San Angelo, TX KSAN NBC WYZZ FOX KLST CBS 114 Tyler-Longview, TX KETK NBC KFXK FOX (1) Includes stations that we own, operate, or provide services to under local service agreements, including time brokerage agreements, shared services agreements, joint sales agreements, local marketing agreements and outsourcing agreements. (2) WDVM serves the Hagerstown, MD sub-market within the DMA. Its signal does not reach the entire Washington, DC market. April22,2019 DearFellowShareholders: Fiscalyear2018markedNexstar’sseventhconsecutiveyearofrecordfinancialperformance, withallofourkeymetrics–fromnetrevenuestofreecashflow–showingdoubledigitgrowth andcominginatthehighestlevelsintheCompany’shistory.Nexstar’sexpandedplatformand presenceinstateswithhighlevelsofpoliticalspendingactivity,combinedwiththeongoing valueofourstrategiesfocusedonleveragingourlocalcontenttogeneratecontinuedgrowth across our television advertising, distribution and digital revenue streams drove total net revenuetoarecord$2.8billion.Withthestrongoperatingleverageinourbusinessmodeland margingrowthrelatedtohistoriclevelsofmidͲtermelectionspendinginourmarkets,Nexstar generatedrecordAdjustedEBITDAofover$1.0billionandfreecashflowof$693.0million, before$8.5millioninoneͲtimeexpenses.Forthefullyear,wedeliveredabout25%ofevery net revenue dollar to the free cash flow line allowing us to invest in our people, our local media platform and in complementaryaccretiveacquisitions,whilereducingnetdebtbyapproximately$400.0millionandreturningover$120.0 milliontoshareholdersintheformofsharerepurchasesanddividends. WithourlongͲtermstrategicfocusoncompletingaccretivetransactionstoenhanceouroverallcompetitivepositionand freecashflowgrowth,weweredelightedtoannounceinDecemberthatwereachedadefinitiveagreementtoacquire Tribune Media. The proposed transaction is a strategically and financially compelling growth opportunity that further expandsourgeographicdiversityandaudiencereach.Uponclosing,Nexstarwillbethelargestlocaltelevisiongroupin theUnitedStateswithaportfolioof197fullpowerownedorservicedtelevisionstationsandoneAMradiostationin115 markets,proͲformaforrequireddivestitures,andagrowingdigitalmediaoperation.Theenhancedscaleofthecombined entitywillenableNexstartobettercompeteintoday’srapidlytransformingindustrylandscape,whileextendingourlongͲ termrecordofdeliveringgreaterlevelsofservicetoourlocalcommunitiesandincreasedreturnsforourshareholders. Financially, the Tribune Media transaction is expected to nearly double our proͲforma average annual revenue and adjustedEBITDAandwillresultinapproximately46%growthinNexstar’sproͲformaaverageannualfreecashflowinthe 2018/2019 cycle to approximately $900 million per year. With gross proceeds from recently announced divestiture agreementsexceedingourinitialexpectationsbyover36%,wenowexpectournetleverageratiotoapproximate5.1xat closing and decline to approximately 4.0x by the end of 2020. As with our past acquisitions, we have developed a comprehensive regulatory compliance plan and a detailed integration plan that will result in significant synergy realization. Nexstar has committed financing for the transaction and has made all required FCC and other regulatory applications,andsubjecttosecuringrequisiteapprovalsweexpecttocompletethetransactioninthethirdquarterof 2019.FormoreinformationregardingtheTribuneMediaacquisition,pleaseseetheCompany’sSecuritiesandExchange Commissionfilingat:https://www.sec.gov/Archives/edgar/data/1142417/000119312518342336/d665569d8k.htm. Asthemostpowerfulandtrustedvoiceinthiscountry,thedepthoflocalbroadcasttelevision'scontributionstoserving theeconomicandpublicneedsoflocalcommunitiesisimmeasurable.Inthe23yearssincewefoundedNexstar,wehave remained true to our mission to uphold the public interest principles of localism, diversity and unbiased broadcast journalism. Through accretive transactions, we’ve strategically assembled highly effective local broadcast and digital teams and a platform that delivers exceptional local content to inform and entertain our viewers, while providing premium local advertising opportunities at scale for advertisers and political campaigns. At the same time, our developmentofcomplementaryretransmissionanddigitalrevenuestreamshavemateriallydiversifiedourrevenuemix andwecontinuetofocusonimplementingnewstandardsandtechnologiestomonetizetheunrivaledreach,trustand influence of our leading local platforms. These are the drivers of our nearͲ and longͲterm financial growth and have positionedNexstartocontinueinvestinginourbusinessandouremployees,whilereducingleverageandreturningcapital toshareholders. NEXSTARMEDIAGROUP2018HIGHLIGHTS Seventhconsecutiveyearofrecordfinancialresults - Netrevenuerose13.8%to$2.8billion TelevisionadrevenueͲͲinclusiveoflocal,nationalandpoliticalͲͲgrew18.2%to$1.3billion Retransmissionfeerevenueimproved12.6%to$1.1billion Digitalrevenueincreased15.2%to$261.2million - Broadcastcashflowgrew29.4%to$1.1billion - AdjustedEBITDAbeforeoneͲtimetransactionexpensesincreased28.6%to$1.03billion - AdjustedEBITDAincreased37.7%to$1.02billion - FreecashflowbeforeoneͲtimetransactionexpensesrose31.2%to$692.7million - Freecashflowrose45.9%to$684.2million CapitalAllocation/Structure - Increasedquarterlycashdividendby25%andpaid$68.6millionintotalcashdividends - Repurchased751,920sharesfor$50.5million,oranaveragepriceof~$67.17pershare - Reducedtotalnetdebtby~$400million - Refinancedtermloansandcreditfacilityinafreecashflowaccretivemanner - Completed accretive acquisitions of KRBKͲTV and WHDFͲTV for an aggregate purchase price of $20.6 million, includingworkingcapital - CompletedaccretiveacquisitionofLKQD,aleadingvideoadinfrastructurecompany,forapproximately$97.0million, includingworkingcapital Lookingahead,Iammoreexcitedforwhatthefutureholdsforourbusinessandtheoverallindustrytodaythanever before.Sincetheveryfirsttelevisionbroadcast,ourindustryhasbeenengagedinaperpetualstateofchangewhichis why in an era of rapidly evolving video distribution technology, local broadcast television has proven to be resilient, maintainingitscentralpositioninAmerica’shouseholds.WiththeFCC’ssupportforthevoluntaryadoptionofnewATSC