Nexstar Ad Sales Fall 36% in Q4 as CW Loss Narrows to $52 Million
Nexstar reported its fourth-quarter 2023 earnings Wednesday, revealing its TV ad sales were down 36% from Oct. 1- Dec. 31.
In the same period, Nexstar’s losses at the CW narrowed to $52 million from $60 million in Q3. That marks a 45% improvement in the network’s losses (down from $94 million) since Q4 of 2022, when the CW was formally acquired by Nexstar from Paramount Global and Warner Bros. Discovery.
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Nexstar’s core ad sales were $449 million in Q4, a decrease of 5.9% from the comparable year-ago quarter. Political ad sales fell 88.7% to $30 million from $266 million in 2022, when midterm elections spiked that categories revenue.
Total TV ad sales were $479 million, down 36% year-over-year from $743 million.
Distribution revenue grew 14.3% ($704 million vs. $616 million), digital dropped 5.4% ($106 million vs. $112 million) and “other” revenue dipped 6.3% ($15 million vs. $16 million).
Free cash flow stood at $295 million. Net income was $100 million, down 43.8% year over year from $178 million in fourth-quarter 2022.
Wall Street forecast earnings per share (EPS) of $4.20 on $1.31 billion in revenue, according to analyst consensus data provided by LSEG, formerly Refinitiv. Nexstar reported diluted EPS of $3.32 on $1.3 billion in revenue. That revenue figure is down from $1.5 billion in Q4 2022.
“The power of the broadcast model and its ability to reach the largest audience of any medium with important news, sports and entertainment content is as strong as ever, reflected by the record audience delivery for NFL and Super Bowl, Grammys and other live sports and event programming,” Nexstar CEO Perry Sook said in a letter to shareholders. “Validating the enduring strength, reach and appeal of broadcast, during the fourth quarter we successfully completed all of our remaining distribution negotiations without interruption, as our distribution partners, their customers and our audience value the highest-rated broadcast and fastest-growing cable news network programming we provide. The completion of these and other recent distribution agreements provide solid visibility for our distribution revenues in 2024 and beyond. As we move into 2024, an election year, we look forward to once again demonstrating the value of broadcast television to candidates and campaigns looking to communicate to the electorate through political advertising on television.”
During an earnings call Wednesday morning, Nexstar president Michael Baird spoke out about the proposed Fox-Disney-Warner Bros. Discovery streaming sports joint venture and how it would affect the TV stations group company, stating there was “significant misinterpretation” and “market overreaction” to the initial news of the product.
“We believe the three JV partners understand the value of the linear ecosystem, as pay TV revenues remain vital to each of them,” Baird said. “They’ve demonstrated this in their respective approaches to DTC, largely avoiding the strategies of some of their peers that have undermined the value of their own core linear networks.”
But Biard cautioned there are still “more questions than answers about the proposed product,” which is already the subject of one lawsuit, with the most notable being “assurance it will actually launch.” “We know launching a new streaming startup will be challenging, including potential regulatory hurdles, lawsuits and other complicating factors surrounding the JV,” Baird said.
Also on that earnings call, Sook responded to an analyst question regarding whether Nexstar was interested in buying another broadcast network, like Disney’s ABC, should it go up for sale: “We would not have an allergic reaction to having that discussion but it would have to be the same kind of opportunity acquisition that we have made in the 27-year history of the company.”
Nexstar stock closed Tuesday at $162.40 per share. The regular U.S. stock markets will reopen at 9:30 a.m. ET.
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