Nexstar Media Group, Inc.

Good day and welcome to the Nexstar Media Group's third quarter 2025 conference call. Today's call is being recorded. I will now turn the conference over to Joe Giaffone, Investor Relations. Please go ahead, sir.

Thank you, Carrie, and good morning, everyone. Let me 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. Nexstar 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, 2024, as filed with the U.S. 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. With that, it's my pleasure to turn the conference over to your host, Nexstar founder, chairman, and CEO, Perry Sook. Perry, please go ahead.

Thank you, Joseph, and good morning, everyone. Thank you for joining us on our call. Mike Baird, our Chief Operating Officer, and Leanne Gleha, our Chief Financial Officer, are both with me this morning. During the third quarter, we made the milestone announcement of our definitive agreement to acquire Tegna in a cash transaction valued at $6.2 billion. The proposed acquisition will strengthen Nexstar's position as the nation's leading local media company with high-quality broadcast stations, award-winning news operations, and innovative local programming, all of which collectively demonstrate our commitment to trusted, community-focused journalism. Operationally, Tegna will enhance and expand Nexstar's scale, geographic reach, and community impact by adding 64 top-performing stations, primarily in the top 75 DMAs, to our growing portfolio of media assets. Financially, on a combined pro forma basis, Nexstar and Tegna generated over $8 billion in revenue and $2.56 billion of adjusted EBITDA. Taking into account expected after-tax synergies and incremental interest expense, the transaction is projected to be more than 40% accretive to Nexstar's standalone adjusted free cash flow, and with roughly $300 million in anticipated synergies, we expect only a modest increase in pro forma net leverage. We're making good progress on our path to closing. Tegna filed its definitive proxy statement, and the shareholder vote there will take place on November the 18th. We submitted our HSR filing on September 30th, and as expected, we received a second request letter from the DOJ on October 30th, as well as a handful of inquiries from state AG offices. Our FCC applications are ready to go once the federal government reopens, and our expectations for closing the transaction by the second half of 2026 remain unchanged. In the meantime, as previously announced, we are taking a disciplined approach to capital allocation, conserving cash that would otherwise have been used for share repurchases in order to fund the more accretive Tegna acquisition. As we enter this next phase of Nexstar's growth, I've never been more confident in our strategy nor more energized about the opportunities ahead. This is a defining moment for our company, our industry, our shareholders, and the communities we serve. When I said on our August conference call that I'm deeply committed to seeing this transaction through, I meant that. That's why I was pleased to extend my employment agreement as chairman and chief executive officer through March 31st of 29. Together with our teams, we will continue our mission to build a stronger, more competitive local media company and expand Nexstar's impressive long-term record of success and shareholder value creation. Turning now to our third quarter financial results, Nexstar delivered another solid quarter of net revenue and adjusted EBITDA, reflecting stable distribution and non-political advertising revenue, as well as strong expense management. It's clear that broadcast television remains the bellwether and the most profitable segment of the media ecosystem, delivering the most watched content and most valuable programming. According to Nielsen, time spent watching broadcast TV increased 20% from August to September, representing the largest month-to-month gain since 2021, and more time spent watching television on broadcast than the entire universe of cable networks. September's results were driven by a strong start to the NFL season, as well as college football. Through week six, the NFL averaged 18 million viewers per game, the highest average viewership since a record 2015 season, And similarly, the average total audience for the first two games of the NBA season, newly launched on broadcast network NBC, reflected a 36% improvement versus the first two games on TNT last year and doubled the total audience of the games on ESPN and 3.6 times the average total audience of the games on Prime Video the first week of the season last year. And of course, November started with a bang with Game 7 of the World Series, delivering over 25 million viewers, the highest number for baseball in nearly a decade. These results underscore the enduring power and reach of broadcast and our consistent ability to aggregate mass audiences in real time, something other platforms just can't replicate. Major sports franchises continue to value the unmatched reach and advantage of broadcast television, and sports programming continues to complement Nexstar's popular local news programming, which accounts for almost half of our total household viewership. In terms of the CW, Nexstar's own broadcast network, CW Sports delivered record performance with the best quarter since the launch of live sports programming in Q1 of 2023, driven by continued strong viewership of the NASCAR Xfinity Series, as well as a strong start to the ACC and Pac-12 college football season. In fact, last Saturday night, our final Xfinity race of the season on broadcast in primetime beat college football on CBS in total viewers, adults 25-54 and adults 18-49. In addition, solid results from our entertainment programming lineup drove the CW's sixth consecutive quarter of primetime ratings growth. Year-to-date, the CW has surpassed competitive Big Four primetime telecasts 250 times across total viewers among the 18 to 49 and 25 to 54 demos. That's an impressive increase over the 45 times we accomplished that for the full year of 2024. The continued success of our long-term strategic growth on high-impact news and sports programming, further validated by the performance of NewsNation, which ranked as the number one basic cable network for year-over-year growth in the third quarter, continuing its trend from Q2. On a year-to-date basis, News Nation surpassed MSNBC 57 times and CNN 39 times in head-to-head telecasts across total viewers and in the adult 25 to 54 demo. That compares to 2024 when News Nation surpassed MSNBC four times and CNN two times in the head-to-head telecasts. These results reflect the fact that News Nation's programming and unique fast-paced Fact-based reporting is resonating with viewers who are looking for a refreshingly balanced and impartial reporting and analysis. In summary, the continued strength and consistency of Nexstar's financial performance reflects our stable, diversified revenue and operating base, our disciplined expense management, and continued execution across our portfolio. Our proposed acquisition of Tegna meets the deregulatory moment where it is and sets the stage for an incredibly bright future ahead for Nexstar, our industry, our shareholders, and the communities we serve. With all of that said, let me turn the call over to Mike Beard. Mike.

Thanks, Perry. Excuse me. And good morning, everyone. Nexstar delivered third quarter net revenue of $1.2 billion, a decline of 12.3% compared to the prior year, primarily reflecting the year-over-year reduction in political advertising. Third quarter distribution revenue of $709 million was flattish compared to the prior year quarter, down 1.4%, and primarily reflects MVPD subscriber attrition and the resolution of a non-recurring disputed customer claim offset, in part by increased rates and other contractual commitments, growth in VMVPD subscribers, and the addition of CW affiliations on certain of our stations. Without the impact of the resolution of a legacy customer dispute, distribution revenue would have been slightly up. Advertising revenue of $476 million decreased 146 million, or 23.5%, over the comparable prior year quarter, primarily reflecting a $145 million year-over-year decrease in political advertising. However, non-political advertising was essentially flat and better than our expectation of a low single-digit decline. Growth in national advertising, including at the CW and News Nation, strong growth in local digital advertising, and the absence of political crowd out that impacted last year's third quarter offset soft local advertising driven by the absence of the Olympics in the third quarter this year. No advertising category materially moved the needle in the quarter and we have not observed any negative impact on the pharmaceutical category from recently introduced regulations. As a reminder, pharmaceutical category represents less than 3% of our total non-political advertising. Speaking of political, we generated approximately $10 million in political advertising revenue during the quarter, primarily driven by spending related to statewide elections in Virginia, including the governor's race, as well as California's redistricting ballot initiative. Looking ahead to the fourth quarter, nonpolitical advertising is currently forecast to decline in the very low single-digits area on a year-over-year basis, benefiting in part from the absence of political crowd out in the quarter, but offset by advertising revenue softness and tougher year-over-year programming comps at the CW and our national digital business. Political advertising is expected to be consistent with 2021 fourth quarter levels. Turning to the CW, we are consistently delivering favorable results from our programming investments, especially from sports, which continues to account for more than 40% of the CW's programming hours. And we continue to build our CW sports portfolio. During the third quarter, we expanded our relationship with the Pac-12 Conference through the 2030-31 season to include 66 annual events, including 13 regular season football games, 35 regular season men's basketball games, 15 regular season women's basketball games, and the semifinal and championship games of the new Pac-12 women's basketball tournament. During the quarter, we also completed a new multi-year agreement with the professional bull riders to be the exclusive live broadcast partner of the PBR Teams series on Saturdays and Sundays, which began airing this last August. The NASCAR Xfinity series, transitioning to the NASCAR O'Reilly Auto Parts series next season, is now firmly established exclusively on CWSports, delivering strong momentum and benefiting from the scale and audience engagement of our broadcast model. Xfinity Races delivered an 11% year-over-year increase in viewership for the first 30 races of the season, with more than 1 million viewers for 20 of those races. By comparison to last season, only 8 of the first 30 races broke the 1 million viewer mark in 2024. Audiences are consistently showing up for our live sports lineup. Ratings for ACC and Pac-12 college football games on the CW have more than doubled year-over-year among adults 25 to 54, while WWE NXT continues to climb since moving to the CW from USA Network, up 12% year-to-date. That momentum is translating into progress toward our financial targets. In the third quarter, we reduced losses at the CW by $5 million, or 24% year-over-year. In the quarter, growth in distribution and advertising revenue virtually offset lower licensing revenue, and lower operating expenses net of a small increase in programming amortization drove the improvement in losses. Our outlook for the year for the CW remains unchanged as we continue to project 2025 losses to be lower than 2024 by about 25%. And our expectation of achieving break-even sometime in 2026 also remains unchanged. To close, I want to reiterate our confidence in our long-term outlook and the enduring strength of Nexstar's business model. Our programming strategy, anchored by live news and sports, continues to deliver results for the CW and News Nation, and we remain committed to unlocking even greater value from these assets as our audiences grow. Our local programming strategy is similarly anchored by our unrivaled live news product, and the proposed Tegna acquisition will create substantial and immediate value for shareholders while advancing the public interest by strengthening local broadcast journalism and providing an expanded range of competitive broadcasts and digital advertising solutions across our portfolio of local and national assets. With that, it's my pleasure to turn the call over to Leanne for the remainder of the financial review.

Leanne? Thank you, Mike, and good morning, everyone. Mike gave you most of the details on the revenue side and on the CW, so I'll provide you a review of expenses, adjusted EBITDA, and free cash flow, along with a review of our capital allocation activities. Together, third quarter direct operating and SG&A expenses, excluding depreciation and amortization and corporate expenses, declined by $23 million, or 3%, primarily driven by our operational restructuring initiatives taken last year. Q3 2025 total corporate expense was $68 million including non-cash compensation expense of $19 million compared to $53 million including non-cash compensation expense of $19 million in the third quarter of 2024. The $15 million increase is primarily due to one-time expenses associated with the expense portion of a non-recurring settlement of a disputed customer claim and the proposed acquisition of Tegna offset in part by the release of certain reserves. Q3 2025 depreciation amortization was $190 million, matching the amounts in the third quarter of 2024. Of these amounts, included in our definition of adjusted EBITDA is $72 million related to the amortization of broadcast rights for Q3 2025, compared to $70 million for Q3 2024. The increase in amortization of broadcast rights by $2 million was primarily due to slightly higher programming costs of the CW versus the comparable prior year quarter, given the mix of programming. Q3 2025 income from equity method investments, which primarily reflects our 31% ownership in the TV Food Network, declined by $12 million versus the comparable prior year quarter, primarily related to TV Food Network's lower revenue. On a consolidated basis, third quarter adjusted EBITDA was $358 million, representing a 29.9% margin and a decrease of $152 million from the third quarter of 2024 of $510 million due primarily to the election cycle. Moving to the components of free cash flow and adjusted free cash flow. Third quarter CapEx, together with payments for capitalized software costs, net of proceeds from asset disposals, were $34 million, an increase from $31 million in the third quarter of last year. Third quarter net interest expense was $94 million, a reduction of $19 million from the third quarter of 2024. On a cash basis, this compares to $93 million in the third quarter of 2025 versus $110 million in Q3 2024. The reduction in interest expense was primarily related to a reduction in SOFR and Nexstar's reduced debt balances. Third quarter operating cash taxes were $33 million compared to $10 million last year. As expected, our cash tax payments, primarily in Q3 2025 and expected in Q4 2025, benefit from the One Big Beautiful Bill Act through the Marine Statement of Bonus Depreciation of CapEx and the ability to deduct amortization of internally developed software. The low cash tax in the third quarter of last year was due to the change in the timing of our tax payments using the annualization method. Cash distributions from the food network were $6 million in the third quarter, which amount is still captured in our free cash flow and adjusted free cash flow definition. This amount reflects our pro rata share of distributions to cover tax from our proportionate share of the income of the JV. Included in the third quarter's adjusted EBITDA, but excluded from adjusted free cash flow, is $22 million of income before amortization from equity method investments, which is primarily our pro-rata share of Food Network net income in the third quarter of 2025. In Q3, programming amortization costs were lower than cash payments by $17 million as certain deferred programming payments were paid and certain future programming was paid prior to airing. As a result, consolidated third quarter 2025 adjusted free cash flow was $166 million compared to $327 million in last year's third quarter. A few additional points of guidance with respect to adjusted free cash flow. We are currently projecting CapEx in the $32 million range and capitalized software payments in the $6 million range in Q4. In addition, we will acquire one of our buildings subject to a long-term lease for $21 million. Based on the current yield curve and our mandatory amortization payments, Q4 interest expense is expected to be in the $88 million range. Q4 2025 cash taxes are expected to be in the $45 million range. In Q4-25, cash distributions from the Food Network are expected to be in the low single-digit million-dollar range compared to our share of adjusted EBITDA in the low-teens millions, and payments for programming are expected to be in excess of amortization by about $30 million, due primarily to prepayment of future programming payments and payment of deferred programming. Turning to capital allocation in our balance sheet. Together with cash from operations generated in the third quarter and cash on hand, we've returned $56 million to shareholders in dividends, repaid $25 million in mandatory debt repayments, and did not repurchase any shares as we are conserving cash for our acquisition of Tegna, which we expect will be more accretive than a standalone share repurchase strategy. Our cash balance at the quarter end was $236 million, including $13 million of cash related to the CW. Our debt balance was $6.4 billion. Because we designate the CW as an unrestricted subsidiary, the losses associated with the CW are not accounted for in the calculation of leverage for purposes of our credit agreement. As such, our net first lien covenant ratio for Nexstar as of September 30th, 2025, which is now calculated on the last eight quarters annualized basis, was 1.73 times, which was well below our first lien and only covenant of 4.25 times. Total net leverage for Nexstar was 3.09 times at quarter end. These leverage statistics are calculated pursuant to the description in our credit agreement. With that, I'll open up the call for questions. Operator, can you go to our first question?

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. And our first question will come from Dan Kernos with Benchmark.

Great, thanks. Good morning. Two for me. Perry, appreciate the update on the deal timing. It was implied yesterday that the FCC might address the cap in early 26, and appreciate all of the color you gave us around what you guys are doing behind the scenes. So I just wanted to give you the floor to maybe talk about why you're confident that the deal will close and close on time as you've proposed it. And then for Mike, just a housekeeping question on the Q3 distribution stuff. Appreciate the color. Any more granularity you could give us? And is that one time in nature or is there any flow through into Q4? Thank you.

I think as it relates to the timing, I mean, the pieces are falling in place. The Eighth Circuit mandate was issued on October the 21st that eliminates the top four ownership rule. That will go into effect as soon as that order is published in the Federal Register and it's effective 30 days later. So we need the government to reopen for that to happen. We have prepared 37 applications seeking approval of the transfer of control of Tegnus licenses to Nexstar. as well as the request for waivers unless they are rendered moot by other rulemaking. And we again continue to believe that this administration, the Trump administration, and Brendan Carr at the FCC are focused on deregulating business, allowing businesses to breathe, allowing businesses to compete, and that we've been spending a lot of time in Washington to reinforce at the regulatory agencies and on the Hill that we are indeed here to help meet the regulatory moment where it is, which all of which continues to point toward deregulatory rulemakings happening in the first half of next year concurrent with the processing of our application. I will add that while there's a lot of work ahead of us in complying with the DOJ requests And I've read our FCC applications. I think they're very good and make very good public interest showings as to why this transaction is in the public interest, which is, by the way, the standard at which the FCC will hold it to. But I can also tell you that internally here, we had several meetings over the last week in conjunction with our board meeting, in conjunction with the integration plans here. There is genuine enthusiasm in this building for this acquisition, for the opportunity it creates to grow our business, for the opportunity it creates to make sure that we secure a future for our business, and the opportunities that we see downstream with 3.0 and Spectrum, additional local content distributed across multiple platforms, and allowing us to compete on a much more level playing field with big tech. And all you have to do is look in the news at things going on around us to see, indeed, why deregulation and further consolidation to preserve local journalism and our industry is necessary. So there's a lot of work to be done on our end, but we have a coalition of the willing that has is really pitching in to comply with all the regulatory requests and to make sure it's done in a timely fashion.

So your second question on the distribution item, no, Dan, that was truly a non-recurring, one-time-only anomaly that will not linger into the fourth quarter at all.

Got it. Super helpful. Thank you both.

Sure. We'll go next to Benjamin Soth with Deutsche Bank.

Good morning. Thanks for the question. So you obviously already have your big transaction in place, but I'm curious if you have any thoughts on what the rest of the industry might look like a few years down the line. And in particular, are there any implications for Nexstar if the rest of the industry goes through consolidation or not? And then I have a follow-up.

I'll start from the end of your question back. I mean, I think a good, strong industry needs to have good, strong companies comprising it. So we think that we will be... the poster company for not only what the future of the industry will look like, but also, you know, the strength of our balance sheet management team, financial profile, and the amount of local content that we deliver, as well as leading on innovation for the industry. But we can't do it all by ourselves. And so we're very much in favor of of having good and strong companies in our industry. And if that means they're good and strong competitors to us, well, hopefully that will just make us that much sharper. So, Mike, I don't know if you want to add more to that.

No, I think you've covered it. I think we're not afraid of competition by any stretch of the imagination. And I think, as Perry says, dealing with all of the forces around us, whether that's dealing with big tech on the advertising side, dealing with Big media, whether that's the networks or other big media, having others in the broadcast space that are good, healthy companies is something that we absolutely support.

Great. And then I'm just curious to get your thoughts on the outlook for the next political cycle. And in general, how do you view the dollars and how they might flow between broadcast and CTV in the future? Thanks.

Well, we've already done our way too early 2026 political forecast internally here. And suffice it to say, we think that our company, based on our geography, even before the integration of the Tegna acquisition, will produce a prodigious amount of political revenue in 2026. And again, it's all based on our geography, the states that we're in, where we see toss-up races, ballot propositions, redistricting, all the things that will cause money to flow. Our, again, way-too-early take is that broadcasts will continue to be the dominant repository for political advertising. However, the fastest growing will probably continue to be CTV advertising as it was in 2024. So no change thematically, you know, and we do project that, you know, we will have substantial political revenue in 2026. And to those that follow the company, that should be no surprise.

Thank you. Moving on to Stephen Cahill with Wells Fargo.

Thanks. I have a couple of strategic questions. So first, Perry, I made the mistake once of writing that you might be nearing retirement. That's clearly not the case. So as you think out to the end of the decade, we'll be in a different administration. We'll be in some different NFL contracts. What are some of your biggest priorities, you know, sort of post-Hegna that you still have in mind for the company as you look forward? And then Proforma for Tegna, I think Nextar will have local news in something like 80% of the country. We've seen your network partners not be shy about going into the streaming market where there's a lot of households that just aren't on linear. How do you think about your ability to be in the CTV market at that level of scale, whether that's working with a big platform provider or doing something on your own? Thank you.

Sure. Well, let me speak to, you know, what we see post Tegna. First of all, our eyes are on the prize in getting Tegna, the Tegna acquisition to and through the finish line. And we're going to run through the tape. So that is our total focus now. But I will say, I don't think that that means that we are forever done with acquisitions. We will continue to look opportunistically for acquisitions that make good industrial logic and most importantly, are substantially accretive to the company. I think we've got a pretty good track record of finding those and we will continue that quest to I think also, you know, with the combined entity, we will have spectrum holdings reaching approximately 80% of the country. And I think that's the next big frontier for the industry and certainly for Nexstar, who will have more spectrum assets than any other company in our space. and the opportunity to develop monetization of the non-video uses of our ATSC 3.0 spectrum continue, in my view, to be the biggest value creation lever in our business as we know it today. And so we'll spend a lot of time on that. And then probably more to the mundane, but we need as an industry, and Nexstar will need to lead this, need to be much more sharp around our business processes, how you buy and sell television time. It is inefficient from a cost and process standpoint for agencies to do business in linear television, yet look at the linear television revenue that is generated in this country, but it's not growing anywhere near the digital alternatives, which are much easier and cheaper to buy from a process perspective. We need to compete on a level playing field with the buying and selling of advertising with the rest of the industry. And I think if we can get to that point, which will require enhanced and better measurement, it will require enhanced and better processes. But, you know, we've got some very big goals in that regard and see opportunity in the future, you know, What if the World Series was going into the 11th inning? and you had a chance to bid for inventory at the next break like you can in digital, whether it's in real time or on some sort of a delay for those additional inventory spots that came available, why can't we vision that and then make it happen in linear television? It's hard, but it's not impossible. But that's where the future is. So business processes, acquisitions, and ATSC 3.0 will be our focus post the successful acquisition and integration of Tegna. I think your second question related to CTV inventory, you know, it's interesting. I mean, we are and have rolled out CTV applications in the vast majority of our marketplaces and are producing alternative programming to fill the hours on those apps. And that'll still be an emphasis and a growth area for the company. But by the same token, why does anyone go into streaming? It's because they can't ubiquitously reach consumers outside of the pay TV ecosystem. Well, we do every day. It's called over the air television. And so while streaming and, and CTV will all be a part of our product offerings, you know, our core tenant is people are trying to get what we've had all along, which is a direct consumer relationship with our content and with our advertising messages. And, and by the way, we don't have to lose billions and billions of dollars to, to ramp that effort up. it already exists. So, I don't mean to be Pollyanna about it, but, you know, if you look at, you know, and I think we gave the example of, you know, what sports looks like on Amazon and what sports looks like on broadcast and what sports looks like on cable, you could put a lot of money into streaming, but you won't achieve the same results as you can one-to-many with broadcast television, which is kind of our definition. So, I hope that's responsive to your question, but we don't see that as doom and gloom. It will be an additional competitive factor, but at this point, people are trying to duplicate what we already have.

Thank you.

And again, that is star one if you would like to ask a question. We'll go next to Craig Huber with Huber Research Partners.

Great. Thank you for taking the questions. Perry, my first question is you talk about $300 million of synergies with Tegna. I would think if anything that's conservative. Can you talk a little bit about how you get to that number? Just repeat that if you would. And then with all those synergies here, once this deal supposedly closes, I would imagine it's going to free up a lot of money on your end if you wanted to enhance the news programming, for example, at Tegna. I've always viewed Tegna as one of the better-run companies in the group, but nothing's perfect, and I think you could potentially increase maybe the number of hours on the news programming side for local, but also the quality of it even further. Maybe just touch on that, please, to talk about what's better for the public. I mean, that would certainly – The appealing, right? That's my first question.

It would, Craig. And we have, just through our desk review, identified nine markets where we can create additional local news broadcasts on stations that either have a de minimis presence or no local news presence. using the combined power of the two stations in the marketplace. Dallas is a perfect example. WFAA does a fine job producing local news in the marketplace. We have a CW affiliate that has a half hour kind of news magazine type program, but not a serious, credible local news effort. We can use the newsroom of WFAA and their people and maybe some additional resources to create a news presence on our CW affiliate here in the marketplace, which is right down the road from where I'm speaking to you from. But there are at least nine markets where we have those kinds of opportunities. And We are now in our discovery phase or diligence 2.0, if you will, which will do a deeper dive into the operating and financials of each of the operating business units as we continue to look for additional opportunities and additional synergies. but at this point, we feel very good about the number and about the enhanced operating opportunity we'll have by virtue of making this acquisition, all of which you'll read about in our FCC filing once it's made. I'll let Leanne talk a little bit more about the synergies.

Yeah. Hey, Craig. So I think as we've talked about on our call when we announced the transaction, there's about $300 million of synergies. It breaks out very similarly to how the synergies broke out in the Tribune deal, which was about 45% from net retrans and the remainder coming from operations. And then on the operations side of things, that's really a combination of things. It's looking at corporate overhead. You don't need duplicative corporate overhead. We have a number of hubs that we use that we can expand to help service the larger station footprint. And then it's looking kind of within the operations for efficiencies, You know, we look at how we operate our stations versus how Tegna operates theirs. And there are many areas where, you know, we do things a little bit differently that generates synergy. And then there's obviously the, you know, significant amount of, you know, 35051 markets that are the overlap markets that we can really operate two stations off of, you know, one infrastructure. And so that's an area where there's a significant portion of those synergies are coming out of that. As Perry said, this has been our initial analysis. We did a very deep analysis in terms of looking at line by line, person by person, what these costs could be. We're going to be in the markets and doing a little bit more work and looking to see what else is there. I think as we also mentioned on a prior call, this really was reflective of the near term. What can we generate in the next one to two years after we close. I think there are some medium-term synergies because there is, you know, so much overlap, there will be an ability for facilities consolidation, but that takes a little bit longer time, right? You have to move people, move equipment, sell a business or sell a piece of real estate and then benefit from those synergies. So, we think there will be more over time, but for right now, we're feeling good about that number and, you know, look forward to, you know, providing you some updates as we kind of move forward.

I have one final housekeeping question, Leanne. Are you guys still expecting gross and net retrans revenue this year to be flat versus a year ago for the full year?

We don't re-update our guidance. That was our guidance for the year. As you know, in this quarter, we did have a one-time impact of an old dispute that got resolved in this quarter, and that impacted our revenue for the quarter. If we didn't have that, our actual distribution revenue would be up. And so you can sort of see for the first three quarters of the year that was flattish. And so you can kind of extrapolate from there.

Okay, great. Thank you, guys. And Patrick Scholl with Barrington Research has our next question.

Hi. Thank you. I was wondering if you could talk a little bit more about the ad trends expectations that you laid out for the fourth quarter. I was wondering if there was, like, any specific, like, weaknesses in local markets or any, you know, category drivers of what you kind of called out.

I'll take that. You know, we're not anticipating any sort of particular changes in the categories. I think we're getting a little bit of sports betting money because of Missouri, which is nice. But from a local perspective... I don't think there's going to be a whole heck of a lot of change in sort of the trajectory in terms of the trends for the third quarter versus the fourth quarter. I think where we're coming in the fourth quarter that's putting a little bit of pressure on the numbers is just overlapping NASCAR at the CW, which we had in the fourth quarter last year. We have it in the fourth quarter this year. And there's just some other kind of one-time items in our national digital business that are putting a little bit of pressure on that number.

Okay, thank you. And we'll go next to Aaron Watts with Deutsche Bank.

Hi, thanks. Clearly, there's optimism that 2026 will be a strong year of political spending. Typically, with that setup, we're used to seeing pressure on core advertising growth due to the crowd out effect. That said, you'll have more sports on the air, notably with NBC broadcasting the NBA, as well as other big sporting events next year. With the benefit of those incremental sports, curious if you think core advertising could be stable or even grow next year compared to 25 or at least perform better than it has in election years in the past.

It's really technical, Aaron. You know, I think that, you know, as far as the Olympics go, it's the Winter Olympics. So it'll be earlier in the year, which is further away from the peak political activity. So we ought to be able to monetize that pretty, pretty well with core advertising. I think it's hard, you know, when you look at. the kind of political revenue that will run through the system next year to expect that you'll see core advertising revenue grow because the displacement will be substantial. We're not issuing guidance at this point, but listen, I think that if interest rates continue to come down and confidence continues to grow, we have resolution on tariffs And all of those things go into confidence and eliminating uncertainty, all of which I think is good for people's confidence in spending money on advertising. So, you know, I think we'll have more tailwinds than headwinds in 2026 overall. But it's too early to quantify the way that you'd like us to.

OK, and if I could ask you one follow up around sports, Perry, there's been reports that the NFL may look to open up negotiations on its media rights. as early as next year. I think there's clear benefits to that for local TV broadcasters, but also some concerns. Would be curious to hear how you're thinking about that potential and whether it is actually a good thing for you and the universe.

Yeah, I'll take that one. I think on balance, we're optimistic about that. I think when you look at the trends that Perry talked about in his opening remarks on broadcast, there really is a very sort of clarifying view of the ecosystem that broadcast brings more eyeballs, more viewers, bigger events than any other platform by far. You've seen that happen in the NBA with the move of incremental games to broadcast from cable. We expect that will probably happen around Major League Baseball as well. You can see it on other sports. So we think the NFL, given its traditional conviction around the importance of local broadcast will not be any kind of principle that they move away from as part of an early discussion. Certainly think an early discussion leaves the networks in a position, probably a stronger position than they would be at the end of that deal. And to the extent that the NFL is moving any games to streaming, we really think that will be at the margin, maybe part of increasing the overall schedule to an 18th game. and largely around potentially, I would think, producing a package of international games. So on the whole, we think that's actually a strong thing, and we think broadcast is going from strength to strength at this moment.

Appreciate the thoughts. Thank you.

This now concludes our question and answer session. I would like to turn the floor back over to Perry Sook for closing comments.

Thank you very much. I'll just say quickly in closing that Nexstar's strong third quarter financial results extended our long-term operational track record, and we plan to put that expertise to work in our pending acquisition of Tegna. We couldn't be more excited nor more energized about our prospects here at Nexstar. In the near term, we see a decreasing interest rate environment the reset of the majority of our distribution contracts at the end of this year, the acquisition of Tegna, and an election year in 2026, all of which we expect to drive shareholder value. Longer term, we expect to accelerate our CW and NewsNation network growth strategies, our deployment of applications for ATSC 3.0, and innovation around how we go to market and the products and services we bring to benefit our viewers and our advertisers. Thank you for joining us. We look forward to updating you on our year-end results in February of next year. Happy holidays and have a good day.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.