67 WALL STREET, New York - November 14, 2012 - The Wall Street Transcript has just published its Entertainment, Toys and Games Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Cable Subscription Rates - International Paid Television Growth - Digital Advertisement Trends - Mobile Device Gaming Prospects - Content Quality
Companies include: Nexstar Broadcasting Group Inc (NXST) and many others.
In the following excerpt from the Entertainment, Toys and Games Report, the CEO of Nexstar discusses the outlook for his company for investors:
TWST: Please begin with an overview of the main areas in which Nexstar Broadcasting is active, and highlight what was most significant in the company's recent earnings call.
Mr. Sook: Sure. Well, we saw substantial growth in core revenues, which is basically local and national revenues on a television station, even excluding political revenues, core revenues were up 7.4%. We obviously saw a substantial amount of political revenue in the third quarter, which we would expect in the political year, but our immediate revenue continues to grow and retransmission fee revenue continues to grow, all contributing to a 20% increase for the third quarter in net revenue, which led to 67% increase in EBITDA and a fivefold increase in free cash flow.
TWST: Would you talk about the Nextstar/Mission Broadcasting agreement to acquire 12 Newport properties? What's the background behind that deal?
Mr. Sook: Sure. Nexstar is acquiring 10 of 12 stations from Newport - 10 of the 12 stations that have been acquired from Newport in a deal that we will close on November 1 - I'm sorry, December 1. The Mission Broadcasting is acquiring two of those 12 stations in Little Rock, Arkansas, but it was an opportunity for us to make a transformative acquisition. It's the largest acquisition in the company's history by dollar volume at a free cash flow accretion to the company of approximately 45%.
So it was - we are opportunistic but disciplined in looking to grow the company via acquisition, and these markets are in or adjacent to markets that we already operate in, and in the case of Salt Lake City, which is the geographic outlier, we have just been three years in that market running a television station for - a pair of television stations for Cerberus Capital and their Four Points Group before they sold that to Sinclair. So we felt very comfortable in the markets and added scale to the company, but most importantly, from our point of view, it was a 45% accretion to free cash flow on a pro forma basis by making the acquisition, and that obviously we are here to create and add value for shareholders.
TWST: What is the state of capital availability for local broadcasters? Are there subordinated debt lenders in the market? Are commercial banks aggressive about funding new acquisitions? What's going on there?
Mr. Sook: Well, I think that coming out of the recession of 2008 and in 2009, most companies in our industry, including ours, have focused on debt reduction and strengthening the balance sheet. And in particular to Nexstar, we've conducted a couple of capital market transactions to reduce our cost of capital, and we are in the market now with a substantial $445 million bank deal on top of the $250 million bond deal that we did two weeks ago...
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.