Nexstar Could Buy Disney’s ABC Stations if Put Up For Sale, Senior Advisor Says

Nexstar Media Group senior advisor Tom Carter suggested that the company would be open to buying Disney’s ABC television stations if they were to be put up for sale.

While the company is already at the Federal Communications Commission’s 39% cap on station ownership by one company, Carter argued that it would not preclude Nexstar from buying stations.

“ABC’s portfolio stations is modest. It’s only eight, largely in the top 10 markets. We’re in eight of the top 10 markets already,” he explained during an investor conference hosted by Bank of America on Wednesday. “So we could buy a second station in that market and not increase our household footprint. There may be a few stations that would require divestiture – either a Nexstar station or an ABC station – but we could onboard those with relatively little friction.”

In July, Disney CEO Bob Iger told CNBC that its linear networks “may not be core” to the company – suggesting that he would be open to a potential sale. In addition to Nexstar, former network TV executives previously told TheWrap that Sinclair Broadcast Group and private equity firm Apollo Global Management could also be potential buyers.

“I don’t know if there’s a deal to be done there because I think they’ve got to be a little bit clearer in their own thinking with regard to how that goes,” Carter added. “We can take direction, but we’re not necessarily out there leaning into any of this stuff without a clear path.”

However, he expressed optimism that there “could be some opportunities depending on how it really falls out.”

“All of these companies, Disney included, have shareholders to answer to for these massive amount of investments and the massive free cash flow that they’re reinvesting in direct to consumer that may make some of the linear assets available,” Carter continued. “I know that Disney had talked about it this way: Let’s kind of morph into a GrowthCo and a SustainableCo … the only issue is this SustainCo is funding the GrowthCo and if you sell one, you’ve lost access to cash flow. Now, granted you’re going to have proceeds, but is that really what you want to do?”

During Carter’s tenure as Nexstar’s president and COO, the company made over 40 acquisitions in 10 years.

“A couple of them were sizable where we more than doubled the size of the company and we did it with largely debt, but those were massively accretive. The Media General transaction was 40% free cash flow accretive and the Tribune acquisition was 60% free cash flow accretive,” he added. “That’s work worth doing if those types of opportunities present themselves going forward or whatever it is. I think you’ll see us take a look at it.”

But he added that there are a lot of questions that need to be answered, including how Disney’s intertwined programming for linear and streaming such as ESPN simulcasting sporting events on ABC would work going forward.

In addition to a potential sale of ABC, Carter addressed Nexstar’s current carriage dispute with DirecTV, which which resulted in the removal of 159 of its local TV stations across 113 markets in July.

“We’ve been in pretty constant contact over the last several weeks. Progress has been made,” he said. “We don’t have a deal. We’re not going to do a bad deal. But I think our expectation is that we will reach an agreement at some point, hopefully sooner rather than later because everybody agrees it’s not in anybody’s best interest to alienate the consumer.”

When asked about potential benefits of the new carriage deal between Charter and Disney, Carter said that it could potentially lessen the decline in attrition going forward, noting there’s “less reason for those subscribers now to leave the pay television ecosystem.”

“Generally speaking, we believe that attrition will continue, but we disagree when people say that the pay television ecosystem as we know it now with linear is going to zero,” he added.

Shares of Nexstar, which climbed 1.6% during Wednesday’s trading session, are down 14% year to date and 21.7% in the past year.

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