Nexstar Media Group, Inc.

Good day, and welcome to Nexstar Media Group's first quarter 2024 conference call. Today's call is being recorded. I will now turn the conference over to Joe Cifoni, Investor Relations. Please go ahead, sir.

Thank you, Maria, and good morning, everyone. I'll read the safe harbor language, and then we'll get right into the call. All statements and comments made by management during this conference call, other than statements of historical fact, may be deemed forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Next, our cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those reflected by the forward-looking statements made during this call. For additional details on these risks and uncertainties, please see Nexstar's annual report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission, and Nexstar's subsequent public filings with the SEC. Nexstar undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. It's now my pleasure to turn the conference over to your host, Nexstar founder, chairman, and chief executive officer, Perry Sook. Perry, please go ahead.

Thank you, Joseph, and good morning, everyone. We appreciate you joining us today. This morning with me on today's call are Mike Baird, our president and chief operating officer, and Leanne Gleha, our chief financial officer. I will start with a summary of recent highlights, followed by Mike's operational review, as well as Leanne's financial review, and then we'll get to your questions. Nexstar's first quarter results marked an excellent start to 2024 and what we expect will be another strong year for the company. We delivered record first quarter net revenue of $1.28 billion, driven by all-time high quarterly distribution revenue of $761 million. Adjusted EBITDA and adjusted free cash flow, once again, exceeded consensus expectations and more importantly underscore the strong profitability of our business model. Our continued outperformance in the current environment is no surprise to us. We've been consistently clear in our view that broadcast is the bellwether of the pay TV ecosystem. Consumers value the bundled programming offerings provided by pay TV distributors that are anchored by our stations. And as the largest local broadcaster and owner of one of the nation's five major broadcast networks, as well as the nation's fastest growing cable news network, Nexstar's importance to the industry is clear and further validated by our consistently strong financial execution, free cash flow generation, and shareholder returns. I recently came across a Harvard Business Review article on the subject of disruption, which has been a recurring theme for many years now in the pay TV industry. And in it, the authors note that corporate leaders have continually been told that the only way to innovate and grow is to disrupt their industries or even their own companies. But for disruption to be a success, there needs to be a clear trade-off between the winners and losers. Looking at our industry, it's now been more than three and a half years since the majority of diversified media companies launched direct consumer products, seeking to generate new value and profits in the digital world by disrupting their linear business models. To date, These products have generated billions of dollars of losses and market cap destruction. And because of the disruption, the linear business of these companies has also suffered, which in our mind is a lose-lose proposition. As a result, we expect to see direct-to-consumer and pay TV programming bundles, content spending, and pricing all to be rationalized across the industry going forward. Better models are being developed with broadcast as the anchor, as it always has been. given viewer demand for our must-have local and national programming, including sports and special event programming that relies on our unrivaled reach to maximize audiences. The virtuous cycle of the broadcast business, combined with the strength of Nexstar's diversified portfolio of local and national media assets, including multiple growth drivers to support our long-term value proposition, will continue to fuel our financial momentum and strong shareholder returns. Before turning the call over to Mike, let me briefly touch on some of those growth drivers, starting with the CW. Nexstar has owned the network for just over a year, and we're making excellent progress as we continue our march towards breakeven. The CW's first quarter operating profit improved by $50 million year over year, driven by a $55 million reduction in programming costs. And for the full year, we expect the CW's operating profit to improve by over $100 million. In terms of viewership, the CW delivered sequential ratings growth in the first two quarters of the 23-24 broadcast season, the first broadcast season where Nexstar controlled the programming lineup, and we're confident that the positive viewership trends will continue throughout the year. In fact, if I look back to this Tuesday, the most recent night for which overnight ratings are available, CW had its highest Tuesday performance of the season in both adults 18 to 49 and in total viewers, and Police 24-7 was the number one new series premiere on the CW in the last three seasons. We're especially excited about the accelerated launch of the NASCAR Xfinity Series on the CW, with the final eight races of this season, including all of the playoff races for this year, airing exclusively on the network beginning in late September, as well as the WWE Next launch on October the 1st. We're also finding other opportunities for the CW to leverage the benefit of being part of the larger Nextar enterprise. To date, we have added 12 CW affiliations to our station group, which has led to significant additional operating profit on the station side of the ledger. And all of the work we have been doing to generate audience growth at NewsNation has begun to pay off as NewsNation has officially entered the zeitgeist. You may have seen our network featured in the series finale of Curb Your Enthusiasm, and last month in what may have been the funniest sketch on SNL in years, a News Nation town hall event with Ryan Gosling as Beavis and Mikey Day as Buckhead in the audience was, as we said, one of the funniest sketches on the network in years in Saturday Night Live. If you haven't Googled it, I highly recommend it. Significantly, as of the May 2024 News Nation, is now the second largest cable news network in pay TV distribution, surpassing both CNN and MSNBC, as distributors recognize the value of NewsNation and what it brings to their consumer offering. And the consumers will get even more value for that distribution when we complete the NewsNation expansion to 24-7 on June the 1st of this year. We continue to make progress on our ATSE 3.0 initiative, surpassing our goal of 50% of the U.S. population served by ATSE 3.0 signals from a Nexstar-owned or partner station following the conversions in Chicago and San Diego this past quarter. We believe the earliest revenues generated from this spectrum will be from business-to-business applications that require moving large amounts of data to multiple devices simultaneously. We're also developing advanced applications for the positioning and timing industry, think GPS, if you will, where we think our terrestrial broadcast capabilities provide us some unique advantages compared to satellite-based systems. In this regard, we are seeing interest from auto manufacturers, digital signing providers, device manufacturers in the Internet of Things industry, and even content delivery networks who are all looking to gain efficiency in the delivery of Internet data using our broadcast technology. To commercialize our technology, we're pursuing new customers through our own business development activities, as well as through joint ventures with other broadcasters. Here's where the scale of our Spectrum assets is our advantage, as we are able to partner with one or maybe two other broadcasters to achieve nationwide coverage of Spectrum. Looking ahead, we remain confident that Nexstar will deliver another strong year of financial results in 2024, given the successful renegotiation of our distribution contracts in 2023, significant presidential election year political advertising, and reduced losses related to the CW network. We're focused on executing our strategy and leveraging the strengths of our platform to maximize every opportunity to drive continued strong growth and shareholder returns. Our confidence in the continued strength of Nexstar's business relative to our current valuation and our long-term growth prospects is further reflected by our capital allocation, including our recently upsized dividend, as well as our now announced first quarter share repurchases. With all of that said, let me now turn the call over to Mike Baird.