EDGAR 10-K Filing

Company CIK: 1142417
Filing Year: 2024
Filename: 1142417_10-K_2024_0000950170-24-021979.json

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ITEM 1. BUSINESS
Item 1. Business
Company Overview
We are a leading diversified media company that produces and distributes engaging local and national news, sports and entertainment content across our television and digital platforms, including more than 310,000 hours of programming produced annually by our business units. Nexstar owns America’s largest local television broadcasting group comprised of top network affiliates, with over 200 owned or partner stations in 117 U.S. markets in 40 states and the District of Columbia reaching over 220 million people. Nexstar’s national television properties include a 75% interest in The CW Network, LLC (“The CW”), America’s fifth major broadcast network, NewsNation, America’s fastest-growing national cable news network in primetime, popular entertainment multicast networks Antenna TV and REWIND TV, and a 31.3% ownership stake in TV Food Network. The Company’s portfolio of digital assets, including its local TV station websites, The Hill and NewsNationNow.com, is collectively a Top 10 U.S. digital news and information property, attracting almost 99 million unique users for December 2023 according to Comscore.
We are a Delaware corporation formed in 1996. Our principal offices are at 545 E. John Carpenter Freeway, Suite 700, Irving, TX 75062. Our telephone number is (972) 373-8800 and our website is http://www.nexstar.tv. The information contained on, or accessible through, our website is not part of this Annual Report on Form 10-K and is not incorporated herein by reference.
Competitive Strengths
Unique Combination of Scaled Local Audiences and Powerful National Reach. We are the largest local television broadcasting company in the United States, generating $4.9 billion of revenue for the year ended December 31, 2023. Our and our partners’ over 200 broadcast stations in 117 local markets reach approximately 70% of U.S. television households (without applying the FCC UHF discount), which local reach is augmented by the national reach we have via our broadcast network, The CW, and our cable news network, NewsNation. According to Nielsen, The CW Network reaches 125 million television households, equal to the reach of the ABC, CBS, FOX and NBC broadcast networks, and NewsNation reaches approximately 69 million television households, virtually equivalent to the reach of CNN, Fox News and MSNBC. Together, Nexstar can provide both national reach and activation of local audiences at scale, representing a differentiated and attractive value proposition for advertisers and brands in an increasingly fragmented marketplace.
Leading Local Franchises. We are focused on building and maintaining leading local franchises in our 117 local markets which are core to our business model. In total, we employ approximately 6,000 journalists and 1,600 salespeople, produce over 310,000 hours of programming, and have developed relationships with over 40,000 advertisers. Each of the stations that we own, operate, program, or provide sales and other services to creates a highly recognizable local brand, primarily through the quality of local news programming, extensive local sports coverage, and community presence. We rank among the top two stations in local news viewership in over 79% of our markets in which we produce local newscasts, according to Comscore for November 2023 late news ratings. In 2023, journalists at our stations won 545 awards for their reporting, including 42 Edward R. Murrow awards and 117 Emmy awards. We also employ a high-quality local sales force in each of our markets to increase revenue from local advertisers by capitalizing on our investment in local programming and community websites. In even-numbered years, when most elections are held, we historically have generated substantial revenue from locally driven political advertising. Given our diverse and expansive geographic reach, we have television stations in more than 80% of markets where there were contested political elections in 2022. In addition, we own or provide services to more than one station in certain markets to enable us to broaden our audience share, enhance our revenue share and achieve significant operating efficiencies. For the year ended December 31, 2023, excluding our owned network assets, the Company earned approximately 71% of its core and political advertising revenue from non-network programming.
Strong National Brands. We have a portfolio of scaled, strong national brands that enables us to engage with national advertisers in more meaningful ways than we have in the past. Our primary national brands include The CW, NewsNation and The Hill. The CW is America’s fifth national broadcast network. NewsNation is America’s fastest growing cable news network in primetime attracting top on-air talent to its ranks given its mission of delivering fact-based, unbiased journalism. The Hill is the nation’s leading, independent political digital media platform.
Diversified Revenue Streams. Our revenue streams are diversified by geography, affiliation and source. In 2023, we generated 55% of our revenue from distribution, 34% from core advertising (of which approximately 68% was from local sources), 1% from political advertising and 10% from digital advertising and other sources. No single customer generated more than 15% of our revenue; no single market generated more than 3% of our revenue; and our affiliations are diverse with no network representing more than 25% of our 2023 combined core and political advertising net revenue.
Intense Operational Focus. We emphasize strict controls on operating and programming costs in order to increase net income, EBITDA and free cash flow. We continually seek to identify and implement cost savings at each of our stations, the stations we provide services to and other business units, and our overall size benefits each station or business unit with respect to negotiating favorable terms with programming suppliers and other vendors. By leveraging our size and corporate management expertise, we are able to achieve economies of scale by providing programming, financial, sales and marketing support to our stations, the stations we provide services to and other business units. Our operational execution expertise is the direct result of our talented management team. We seek to attract and retain corporate, business unit and station general managers with proven track records by providing equity incentives.
Attractive Financial Profile. In 2023 and 2022, we generated total net revenue of $4.9 billion and $5.2 billion, respectively, generated net cash flow from operating activities of nearly $1 billion and $1.4 billion, respectively, and returned a significant percentage of that cash flow to shareholders in the form of share repurchases and dividends-$796 million in 2023 and $1.0 billion in 2022-while maintaining a corporate credit rating of Ba3 / BB+ as rated by Moody’s / S&P. We believe we have the financial flexibility to invest in both organic and inorganic growth initiatives while continuing to return capital to our shareholders.
Growth Strategies
We continually seek to generate revenue, net income, EBITDA and cash flow growth through the following strategies:
Leverage Our Scale. As the largest local television broadcaster with significant, scaled national media properties, we believe we are an important partner for the major broadcast networks, multichannel video programming distributors (“MVPDs”) and online video distributors (“OVDs”), and advertisers. We believe we are one of the largest affiliate groups for each of our major broadcast network partners and we are an important partner for the MVPDs and OVDs which include our content in their consumer offerings. For national advertisers we have a collection of national networks/properties including The CW, NewsNation, Antenna TV and The Hill as well as television stations covering 70% of the country (without applying the FCC UHF discount) including 8 of the top 10 and 18 of the top 25 DMAs. Our digital assets attract an audience that makes us a top ten digital news and information property, according to Comscore. Our scale provides us with unique operating advantages in the form of services we can provide to our advertisers, audience and employees, a platform for growth and operating expense synergies and access to capital. As part of this strategy, in 2023, we centralized our national advertising sales in house in order to drive advertising sales across our diversified media portfolio by further emphasizing our client-first approach, combined with a new data-driven, multi-platform focus.
Continue to Grow Distribution and Advertising Revenues. We believe our core business of distribution and advertising revenue has the potential to continue to grow. We believe that the share of audience that our content generates for MVPDs and OVDs is greater than the share of fees those platforms pay us and that broadcast advertising continues to provide commercial and political advertisers with access to the broadest television audience available. In addition, we are focused on better monetizing our digital content and audience and growing our portfolio of digital products, services and content and associated revenue streams, including apps for NewsNation, The Hill and other local television station content.
Improve and Expand National Broadcast and Cable Networks. We seek to continue to increase the viewership, revenues and profitability of our national television network assets, The CW and NewsNation.
The CW. As the largest affiliate of The CW, we acquired the network in September 2022 (for no consideration) in order to sustain and grow our CW-related revenue streams and to improve this underexploited national broadcast network asset. Our growth strategy for The CW is to cost efficiently improve and diversify the programming to better align with broadcast audiences with the intention of improving ratings and revenue (both distribution and advertising) and reducing programming and other operating costs. Recognizing the importance of live sports and other sports programming to broadcast audiences, in 2023, we launched CW Sports, a sports programming division of The CW. Since then, we have added sports programming to the network’s primetime line-up including Inside the NFL, 100 Days to Indy, and our exclusive broadcast rights to WWE NXT beginning in 2024. CW Sports also expanded the number of hours of network programming on the weekend in 2023 to offer LIV Golf, ACC college football and basketball games, and the future launch of NASCAR Xfinity Series on Saturdays beginning in 2025. We also introduced new, less costly, primetime programming beginning on a limited basis in the summer of 2023 and more substantially with the 2023/2024 broadcast season which began in October 2023. We believe there is potential for The CW to improve its profitability and, together with Nexstar’s CW station affiliates, the overall net profit contribution to Nexstar. In 2023, The CW renewed and expanded its affiliation agreements with key station operators and launched CW Network affiliations on four Nexstar-owned and operated television stations, three of which are in the top-15 television markets.
NewsNation. NewsNation is America’s fastest growing cable news network in primetime and has been recognized by independent watchdog groups such as Ad Fontes Media, NewsGuard and AllSides for its independent, unbiased reporting of national and local news. Currently, NewsNation provides 24 hours of news content each weekday which we expect to expand to seven days a week in 2024. NewsNation was launched in 2020, when we initiated the conversion of WGN America to NewsNation, leveraging our core competency in news and profitable foundation to build a network focused on providing unbiased, fact-based news. We believe there is significant growth potential for NewsNation as news networks are among the most watched and profitable cable networks.
Develop New Revenue Streams. We seek to generate new revenue streams leveraging the platform and assets of our company. Given our extensive station portfolio and geographic coverage, we are in the process of converting the technology used by our stations to a new standard, ATSC 3.0, which will enable us to provide new high speed data transmission services to businesses and consumers. In February 2024, we achieved our goal of reaching 50% of U.S. television households with ATSC 3.0. We anticipate that this conversion will enable us to develop a new business and generate additional revenue in the future.
Acquire and Invest in New and Complementary Businesses. We selectively pursue acquisitions where we believe we can improve revenue, operating income, net income, EBITDA and cash flow through active management. We selectively pursue acquisitions of businesses that leverage our platform, scale and capabilities and are complementary to our vision of providing local news, entertainment, and sports content through broadcast and digital platforms. In addition, we will continue to pursue television station acquisitions in markets where permitted by the current regulatory framework.
Stations
As of January 2024, we owned, operated, programmed or provided sales and other services to 201 full power television stations in 117 markets in 40 states and the District of Columbia, reaching approximately 39% of all U.S. television households (reflecting our owned stations only and after applying the Federal Communications Commission’s (“FCC”) ultra-high-frequency (“UHF”) discount) and approximately 70% of all U.S. television households reflecting ours and our partners’ stations and excluding the FCC UHF discount. The stations are affiliates of CBS, FOX, NBC, ABC, The CW, MyNetworkTV (“MNTV”) and other broadcast television networks and provide television programming to consumers in our markets, including network programing, content that the stations produce, including local news, and syndicated programs that the stations acquire. In 2023, we acquired KUSI-TV, a full-power independent station in San Diego, CA, WSNN-LD, a low power independent station in Tampa, FL, which is now affiliated with MNTV; and in 2024 we entered into a time brokerage agreement with KAZT, a full power independent station in Phoenix, AZ, which is now affiliated with The CW. These stations are included in the table below and the full-power stations and included in our station count. We also own and operate one AM radio station in Chicago, IL.
Of the 201 full power television stations, 37 are 100% independently owned by VIEs. We consolidate 35 of these VIEs (the “consolidated VIEs”) in our financial statements. In compliance with FCC regulations for all the parties, all VIEs maintain complete responsibility for and control over programming, finances, personnel and operations of their stations. For the consolidated VIEs, we are deemed under U.S. GAAP to have controlling financial interests in these entities because of Nexstar’s (i) local service agreements with the consolidated VIEs’ stations, (ii) guarantee (excluding The CW) of the obligations incurred under the senior secured credit facility of Mission Broadcasting, Inc. (“Mission”), a consolidated VIE, (iii) power over significant activities affecting the consolidated VIEs’ economic performance, including budgeting for advertising revenue, certain advertising sales and, in some cases, hiring and firing of sales force personnel and (iv) renewable, exercisable and assignable purchase options granted by each consolidated VIE which permit Nexstar to acquire the assets and assume the liabilities of all of the consolidated VIEs’ stations at any time, subject to FCC consent. For additional information on VIEs, see Note 2 to our Consolidated Financial Statements in Part IV, Item 15(a) of this Annual Report on Form 10-K.
The following table sets forth general information about the television stations (full power, low power and multicast channels) we own, operate, program or provide sales and other services to as of January 2024.
Market Rank(1)
Market
Status(2)
Full Power
Stations
Primary
Affiliation(3)
Low Power Stations /
Multicast Channels
Other Affiliation(3)(4)
FCC License
Expiration Date
New York, NY
LSA
WPIX(5)
The CW
WPIX-D2, D4
Antenna TV, Rewind TV
(23)
Los Angeles, CA
O&O
KTLA
The CW
KTLA-D2, D3, D4, D5
Antenna TV, GRIT, TBD, Rewind TV
(23)
Chicago, IL
O&O
WGN
Independent
WGN-D2, D3, D4, D5
Antenna TV, GRIT, Rewind TV, TBD
4/1/2030
Philadelphia, PA
O&O
WPHL(6)
The CW
WPHL-D2, D3, D4
Antenna TV/MNTV, GRIT, Comet
(23)
Dallas, TX
O&O
KDAF
The CW
KDAF-D2, D3, D4, D5
Antenna TV, GRIT, Charge!, Rewind TV
8/1/2030
Houston, TX
O&O
KIAH
The CW
KIAH-D2, D3, D4, D5
Antenna TV, Comet, TBD, Court TV
(23)
DC/Hagerstown, MD
O&O
O&O
WDCW
WDVM(7)
The CW
Independent
WDCW-D2, D3, D4
WDVM-D2, D3, D4
Antenna TV, WDVM, Univision
ION Mystery, Rewind TV, ShopLC
10/1/2028
10/1/2028
San Francisco, CA
O&O
KRON(6)
The CW/ MNTV
KRON-D2, D3, D4, D5
Antenna TV, Rewind TV, Charge!, ShopLC
(23)
Phoenix, AZ
LSA
KAZT(8)
The CW
KAZT-D2, D3, D4, D5
MeTV, HSN, Charge!, AZTV
10/1/2030
Tampa, FL
O&O
O&O
O&O
WFLA
WTTA(6)(9)
NBC
The CW
WFLA-D2, D3
WTTA-D2
WSNN-LD(10), D2, D3, D4
Charge!, Antenna TV
Cozi TV
MNTV, GRIT, Laff, Court TV
2/1/2029
2/1/2029
2/1/2029
Denver, CO
O&O
O&O
O&O
KDVR
KFCT
KWGN
FOX
FOX
The CW
KDVR-D2, D3
KWGN-D2, D3, D4
Antenna TV, TBD
getTV, Comet, Charge!
(23)
(23)
4/1/2030
Cleveland, OH
O&O
WJW
FOX
WJW-D2, D3, D4
Antenna TV, Comet, Charge!
10/1/2029
Sacramento, CA
O&O
KTXL
FOX
KTXL-D2, D3, D4
Antenna TV, GRIT, TBD
(23)
Charlotte, NC
O&O
O&O
WJZY
WMYT
FOX
MNTV
WJZY-D3, D4, D5, D6,
D7, D8
Charge!, GRIT, TheGrio, ION,
Antenna TV, Rewind TV
12/1/2028
12/1/2028
Raleigh, NC
O&O
WNCN
CBS
WNCN-D2, D3, D4
Rewind TV, GRIT, Antenna TV
12/1/2028
Portland, OR
O&O
O&O
KOIN
KRCW
CBS
The CW
KOIN-D2, D3
KRCW-D2, D3, D4
getTV, Rewind TV
Antenna TV, GRIT, TBD
(23)
St. Louis, MO
O&O
O&O
KTVI
KPLR
FOX
The CW
KTVI-D2, D3, D4
KPLR-D2, D3, D4
Antenna TV, GRIT, Dabl
Court TV, Comet, Rewind TV
(23)
2/1/2030
Indianapolis, IN
O&O
O&O
O&O
WTTV
WTTK
WXIN
CBS
CBS
FOX
WTTV-D2, D3, D4
WTTK-D2, D3
WXIN-D2, D3, D4
Independent, Comet, TBD
Independent, Cozi TV
Antenna TV, Rewind TV, Charge!
8/1/2029
8/1/2029
8/1/2029
Nashville, TN
O&O
WKRN
ABC
WKRN-D2, D3, D4
ION Mystery, True Crime, Rewind TV
8/1/2029
Salt Lake City, UT
O&O
O&O
KTVX
KUCW
ABC
The CW
KTVX-D2, D3, D4
KUCW-D2, D3, D4
MeTV, Rewind TV, TheGrio
ION Mystery, Quest, ShopLC
(23)
San Diego, CA
O&O
O&O
KSWB
KUSI(11)
FOX
Independent
KSWB-D2, D3, D4
KUSI-D2
Antenna TV, Court TV, ION
Rewind TV
(23)
12/1/2030
New Haven, CT
O&O
O&O
WTNH
WCTX(9)
ABC
MNTV
WTNH-D2
WCTX-D2
Rewind TV
Comet
(23)
Columbus, OH
O&O
WCMH
NBC
WCMH-D2, D3, D4
GRIT, ION, Laff
10/1/2029
Kansas City, MO
O&O
WDAF
FOX
WDAF-D2, D3, D4
Antenna TV, Rewind TV, TBD
(23)
Austin, TX
O&O
O&O
LSA
KXAN
KBVO
KNVA(12)
NBC
MNTV
The CW
KXAN-D2, D3, D4
KBVO-D2, D3, D4
KNVA-D2, D3, D4
Cozi TV, ION, Rewind TV, Defy
Bounce, Antenna TV, Defy
GRIT, Laff, Court TV
(23) (23)
8/1/2030
Spartanburg, SC
O&O
O&O
WSPA
WYCW(9)
CBS
The CW
WSPA-D3
WYCW-D3
ION
Rewind TV
12/1/2028
12/1/2028
Las Vegas, NV
O&O
KLAS
CBS
KLAS-D2, D3, D4
Rewind TV, getTV, ShopLC
(23)
Grand Rapids, MI
O&O
O&O
O&O
WOOD
WOTV
NBC
ABC
WOOD-D2, D3
WOTV-D2, D3, D4
WXSP-CD, D2, D3
Rewind TV, TheGrio
The CW, Charge!, DABL
MNTV, Nest, Comet
10/1/2029
10/1/2029
10/1/2029
Portsmouth, VA
O&O
O&O
WAVY
WVBT
NBC
FOX
WAVY-D2, D3, D4
WVBT-D2, D3
Nest, getTV, ShopLC
Cozi TV, Rewind TV
10/1/2028
10/1/2028
Harrisburg, PA
O&O
WHTM
ABC
WHTM-D2, D3, D4, D5
ION, GRIT, Laff, WLYH
(23)
Greensboro, NC
O&O
WGHP
FOX
WGHP-D2, D3, D4
Antenna TV, GRIT, Dabl
12/1/2028
Birmingham, AL
O&O
WIAT
CBS
WIAT-D2, D3, D4
ION Mystery, GRIT, Defy
4/1/2029
Oklahoma City, OK
O&O
O&O
KFOR
KAUT(6)
NBC
The CW
KFOR-D2, D3, D4
KAUT-D2, D3, D4
Antenna TV, True Crime, Dabl
Rewind TV, ION Mystery, Cozi TV
(23)
Albuquerque, NM
O&O
O&O
O&O
LSA
LSA
LSA
KRQE
KREZ(13)
KBIM(13)
KRWB(5)
KWBQ(5)
KASY(5)
CBS
CBS
CBS
The CW
The CW
MNTV
KRQE-D2, D3
KREZ-D2
KBIM-D2
KRWB-D2
KWBQ-D2, D3, D4, D5
KASY-D2, D3, D4, D5
FOX, Bounce
FOX
FOX
MNTV
GRIT, Laff, ION, Rewind TV
ION Mystery, getTV, Court TV, Antenna TV
(23)
Memphis, TN
O&O
WREG
CBS
WREG-D2, D3
News3, Antenna TV
8/1/2029
Market Rank(1)
Market
Status(2)
Full Power
Stations
Primary
Affiliation(3)
Low Power Stations /
Multicast Channels
Other Affiliation(3)(4)
FCC License
Expiration Date
New Orleans, LA
O&O
O&O
WGNO
WNOL
ABC
The CW
WGNO-D2, D3, D4
WNOL-D2, D3, D4
Antenna TV, Rewind TV, TBD
GRIT, Comet, Charge!
(23)
6/1/2029
Fresno, CA
O&O
O&O
KSEE
KGPE
NBC
CBS
KSEE-D2, D3, D4
KGPE-D2, D3, D4
Bounce, GRIT, Rewind TV
ION Mystery, TheGrio, Court TV
(23)
Providence, RI
O&O
LSA
WPRI
WNAC(5)
CBS
FOX
WPRI-D2, D3, D4
WNAC-D2, D3, D4
MNTV, True Crime, Dabl
The CW, Rewind TV, Antenna TV
(23)
Buffalo, NY
O&O
O&O
WIVB(9)
WNLO
CBS
The CW
WIVB-D2
WNLO-D2
QVC
Rewind TV
(23)
Richmond, VA
O&O
WRIC
ABC
WRIC-D2, D3, D4
Rewind TV, Cozi TV, Laff
10/1/2028
Mobile, AL
O&O
O&O
WKRG
WFNA
CBS
The CW
WKRG-D2, D3, D4
WFNA-D2, D3, D4
ION, MeTV, Court TV
Bounce, True Crime, GRIT
4/1/2029
4/1/2029
Wilkes Barre, PA
O&O
LSA
WBRE
WYOU(5)
NBC
CBS
WBRE-D2, D3, D4
WYOU-D2, D3, D4
Laff, Rewind TV, True Crime
ION Mystery, getTV, Cozi TV
(23)
Little Rock, AR
O&O
O&O
LSA
LSA
KARK
KARZ
KLRT(5)
KASN(5)
NBC
MNTV
FOX
The CW
KARK-D2, D3, D4
KARZ-D2
KLRT-D2
KASN-D2, D3, D4, D5
Laff, GRIT, Antenna TV
Bounce
ION Mystery
Rewind TV, ION, Defy, GRIT
6/1/2029
6/1/2029
6/1/2029
6/1/2029
Albany, NY
O&O
LSA
WTEN
WXXA(5)
ABC
FOX
WTEN-D2, D3, D4
WXXA-D2, D3, D4, D5
Cozi TV, Antenna TV, ION Mystery
OTB-TV, GRIT, Rewind TV, True Crime
(23)
Knoxville, TN
O&O
WATE
ABC
WATE-D2, D3, D4
Antenna TV, Rewind TV, Cozi TV
8/1/2029
Lexington, KY
O&O
WDKY
FOX
WDKY-D2, D3, D4
Rewind TV, Charge!, Comet
8/1/2029
Dayton, OH
O&O
LSA
WDTN
WBDT(9)(14)
NBC
The CW
WDTN-D2, D3
WBDT-D2
ION Mystery, ION
Bounce
10/1/2029
10/1/2029
Des Moines, IA
O&O
WHO
NBC
WHO-D2, D3, D4
Rewind TV, Antenna TV, Iowa’s Weather Channel
2/1/2030
Honolulu, HI
O&O
O&O
O&O
O&O
O&O
O&O
KHON
KHAW(15)
KAII(15)
KGMD(15)
KGMV(15)
KHII
FOX
FOX
FOX
MNTV
MNTV
MNTV
KHON-D2, D3, D4
KHAW-D2, D3, D4
KAII-D2, D3, D4
The CW, GRIT, Rewind TV
The CW, GRIT, Rewind TV
The CW, GRIT, Rewind TV
(23)
Green Bay, WI
O&O
WFRV
CBS
WFRV-D2, D3, D4
Bounce, True Crime, Rewind TV
12/1/2029
Roanoke, VA
O&O
O&O
WFXR
WWCW
FOX
The CW
WFXR-D2, D3, D4
WWCW-D2, D3, D4
The CW, Bounce, Quest
FOX, Rewind TV, GRIT
10/1/2028
10/1/2028
Wichita, KS
O&O
O&O
O&O
O&O
O&O
KSNW
KSNC(16)
KSNG(16)
KSNK(16)
NBC
NBC
NBC
NBC
KSNW-D2, D3, D4
KSNG-D2
KSNL-LD
Telemundo, ION, True Crime
Telemundo
NBC
6/1/2030
(23)
(23)
(23)
6/1/2030
Springfield, MO
O&O
O&O
LSA
KRBK
KOZL
KOLR(5)
FOX
MNTV
CBS
KRBK-D2, D3, D4
KOZL-D2, D3, D4
KOLR-D2, D3, D4
Antenna TV, Dabl, ION
ION Mystery, Bounce, Rewind TV
Laff, GRIT, ShopLC
(23)
2/1/2030
2/1/2030
Rochester, NY
O&O
WROC
CBS
WROC-D2, D3, D4
Bounce, GRIT, ION Mystery
(23)
Charleston, WV
O&O
WOWK
CBS
WOWK-D2, D3, D4
ION Mystery, GRIT, Rewind TV
10/1/2028
Huntsville, AL
O&O
O&O
WHNT
WHDF
CBS
The CW
WHNT-D2, D3
WHDF-D2, D3, D4
The CW, Antenna TV
Court TV, Rewind TV, Charge!
4/1/2029
4/1/2029
Brownsville, TX
O&O
O&O
KVEO
KGBT
NBC
MNTV
KVEO-D2
KGBT-D2, D3, D4, D5, D6
CBS
Rewind TV, Comet, Estrella, ION Mystery, GRIT
8/1/2030
(23)
Waco-Bryan, TX
O&O
O&O
KWKT
KYLE
FOX
MNTV
KWKT-D2, D3, D4
KYLE-D2, D3, D4
MNTV, Antenna TV, Bounce
FOX, Antenna TV, Laff
(23)
Savannah, GA
O&O
WSAV
NBC
WSAV-D2, D3, D4
The CW, Court TV/MNTV, Laff
(23)
Colorado Springs, CO
O&O
O&O
KXRM
FOX
KXRM-D2, D3, D4
KXTU-LD, D2, D3, D4
The CW, ION, ION Mystery
The CW, Bounce, Laff, Antenna TV
(23)
Syracuse, NY
O&O
WSYR
ABC
WSYR-D2, D3, D4
Antenna TV, Bounce, Laff
(23)
Charleston, SC
O&O
WCBD
NBC
WCBD-D2, D3, D4
The CW, ION, Laff
12/1/2028
El Paso, TX
O&O
KTSM
NBC
KTSM-D2, D3, D4
Estrella, ION Mystery, Laff
(23)
Champaign, IL
O&O
O&O
WCIA
WCIX
CBS
MNTV
WCIA-D2, D3, D4
WCIX-D2, D3, D4
MNTV, Bounce, GRIT
CBS, ION Mystery, Laff
(23)
12/1/2029
Shreveport, LA
O&O
O&O
LSA
KTAL
KSHV
KMSS(5)
NBC
MNTV
FOX
KTAL-D2, D3, D4
KSHV-D2, D3, D4
KMSS-D2
Laff, Cozi TV, HSN
ION Mystery, ION, Quest
Rewind TV
(23)
6/1/2029
6/1/2029
Market Rank(1)
Market
Status(2)
Full Power
Stations
Primary
Affiliation(3)
Low Power Stations /
Multicast Channels
Other Affiliation(3)(4)
FCC License
Expiration Date
Burlington, VT
O&O
LSA
WFFF
WVNY(5)
FOX
ABC
WFFF-D2, D3,D4
WVNY-D2, D3, D4
ION Mystery, Bounce, Antenna TV
Laff, GRIT, Quest
(23)
Baton Rouge, LA
O&O
O&O
O&O
LSA
WGMB
WVLA(17)
FOX
NBC
WGMB-D2, D3
WBRL-CD
KZUP-CD
WVLA-D2, D3
The CW, Cozi TV
The CW
Independent
Laff, ION
6/1/2029
(23)
6/1/2029
6/1/2029
Fayetteville, AR
O&O
O&O
O&O
KFTA
KNWA
KXNW
FOX
NBC
MNTV
KFTA-D2, D3, D4, D5
KNWA-D2, D3, D4
KXNW-D2, D3, D4
NBC, ION Mystery, Court TV, MNTV
FOX, Laff, GRIT
Rewind TV, Comet, Bounce
(23)
(23)
6/1/2029
Jackson, MS
O&O
WJTV
CBS
WJTV-D2, D3, D4
The CW, ION, Court TV
6/1/2029
Myrtle Beach-Florence, SC
O&O
WBTW
CBS
WBTW-D2, D3, D4
MNTV/Antenna TV, ION, ION Mystery
12/1/2028
Tri-Cities, TN-VA
O&O
WJHL
CBS
WJHL-D2, D3
ABC, Antenna TV
8/1/2029
Greenville, NC
O&O
WNCT
CBS
WNCT-D2, D3, D4
The CW, Rewind TV, ION Mystery
12/1/2028
Quad Cities, IL
O&O
O&O
LSA
WHBF
KGCW
KLJB(5)
CBS
The CW
FOX
WHBF-D2, D3, D4
KGCW-D2, D3, D4
KLJB-D2, D3, D4
Court TV, GRIT, ION Mystery
ThisTV, Laff, CBS
MeTV, Rewind TV, Bounce
12/1/2029
2/1/2030
(23)
Evansville, IN
O&O
LSA
WEHT
WTVW(5)
ABC
The CW
WEHT-D2, D3, D4
WTVW-D2, D3, D4
Laff, Cozi TV, Rewind TV
Bounce, ION Mystery, ION
8/1/2029
8/1/2029
Ft. Wayne, IN
O&O
WANE
CBS
WANE-D2, D3, D4
ION, Laff, ION Mystery
8/1/2029
Tyler-Longview, TX
O&O
O&O
LSA
KETK
KFXK(17)
NBC
FOX
KETK-D2, D3, D4
KTPN-LD
KFXK-D2, D3, D4
GRIT, ION, Antenna TV
MNTV
MNTV, ION Mystery, Laff
(23)
8/1/2030
Augusta, GA
O&O
WJBF
ABC
WJBF-D2, D3, D4
MeTV, ION, ION Mystery
4/1/2029
Sioux Falls, SD
O&O
O&O
O&O
KELO
KDLO(18)
KPLO(18)
CBS
CBS
CBS
KELO-D2, D3, D4
KDLO-D2, D4
KPLO-D2
MNTV, ION, The CW
MNTV, The CW
MNTV
4/1/2030
(23)
4/1/2030
Altoona, PA
O&O
WTAJ
CBS
WTAJ-D2, D3, D4
ION Mystery, Laff, GRIT
(23)
Lansing, MI
O&O
LSA
WLNS(9)
WLAJ(5)
CBS
ABC
WLAJ-D2
The CW
10/1/2029
10/1/2029
Springfield, MA
O&O
WWLP
NBC
WWLP-D2, D3, D4
The CW, ION, ION Mystery
(23)
Youngstown, OH
O&O
O&O
LSA
WKBN(9)
WYTV(14)
CBS
ABC
WKBN-D2
WYFX-LD, D2, D3, D4, D5, D6
WYTV- D2
FOX
FOX, MNTV, ION, Bounce, Laff, Antenna TV MNTV
10/1/2029
10/1/2029
10/1/2029
Peoria, IL
O&O
LSA
WMBD
WYZZ(19)
CBS
FOX
WMBD-D2, D3, D4
Bounce, Laff, ION Mystery
12/1/2029
(23)
Bakersfield, CA
O&O
O&O
KGET
NBC
KGET-D2, D3, D4
KKEY-LP
The CW, Telemundo, Laff
Telemundo
(23)
Lafayette, LA
O&O
KLFY
CBS
KLFY-D2, D3, D4
Dabl, ION, Laff
6/1/2029
Columbus, GA
O&O
WRBL
CBS
WRBL-D2, D3, D4
Rewind TV, ION, Laff
4/1/2029
La Crosse, WI
O&O
O&O
WLAX
WEUX(20)
FOX
FOX
WLAX-D2, D3, D4
WEUX-D2, D3, D4
Antenna TV, Laff, GRIT
Antenna TV, ION Mystery, Bounce
12/1/2029
12/1/2029
Amarillo, TX
O&O
O&O
LSA
KAMR
KCIT(5)
NBC
FOX
KAMR-D2, D3, D4
KCPN-LP-D2
KCIT-D2, D3, D4
MNTV, Laff, Antenna TV
MNTV, Rewind TV
GRIT, ION Mystery, Bounce
(23)
Rockford, IL
O&O
LSA
WQRF
WTVO(5)
FOX
ABC
WQRF-D2, D3, D4
WTVO-D2, D3, D4
Bounce, ION Mystery, Rewind TV
MNTV, Laff, GRIT
12/1/2029
12/1/2029
Topeka, KS
O&O
O&O
LSA
KSNT
KTKA(14)
NBC
ABC
KSNT-D2, D3, D4
KTMJ-CD, D2, D3, D4
KTKA-D2, D3, D4
FOX, ION, Bounce
FOX, ION Mystery, GRIT, Laff
Rewind TV, The CW, Antenna TV
6/1/2030
(23)
6/1/2030
Lubbock, TX
O&O
LSA
KLBK
KAMC(5)
CBS
ABC
KLBK-D2, D3, D4
KAMC-D2, D3, D4
Court TV, Antenna TV, Rewind TV
ION Mystery, Bounce, QVC2
8/1/2030
(23)
Monroe, LA
O&O
LSA
KARD
KTVE(5)
FOX
NBC
KARD-D2, D3, D4
KTVE-D2, D3, D4
Bounce, GRIT, Antenna TV
KARD, Laff, ION Mystery
6/1/2029
6/1/2029
Minot-Bismarck, ND
O&O
O&O
O&O
O&O
KXMB(21)
KXMC
KXMD(21)
KXMA
CBS
CBS
CBS
The CW
KXMB-D2, D3, D4
KXMC-D2, D3, D4
KXMD-D2, D3, D4
KXMA-D2, D3, D4
The CW, Laff, ION Mystery
The CW, Laff, ION Mystery
The CW, Laff, ION Mystery
CBS, Laff, ION Mystery
4/1/2030
4/1/2030
4/1/2030
(23)
Midland, TX
O&O
LSA
KMID
KPEJ(5)
ABC
FOX
KMID-D2, D3, D4
KPEJ-D2, D3
Laff, ION Mystery, GRIT
Estrella, Rewind TV, Antenna TV
8/1/2030
(23)
Panama City, FL
O&O
WMBB
ABC
WMBB-D2, D3, D4
The CW, Laff, ION Mystery
2/1/2029
Wichita Falls, TX
O&O
O&O
LSA
KFDX
KJTL(5)
NBC
FOX
KFDX-D2, D3, D4
KJBO-LP
KJTL-D2, D3, D4
MNTV, Laff, Antenna TV
MNTV
GRIT, Bounce, ION Mystery
(23)
Sioux City, IA
O&O
KCAU
ABC
KCAU-D2, D3, D4
ION Mystery, Laff, Bounce
2/1/2030
Joplin, MO
O&O
LSA
KSNF
KODE(5)
NBC
ABC
KSNF-D2, D3, D4
KODE-D2, D3, D4
Laff, ION Mystery, Antenna TV
GRIT, Bounce, ION
2/1/2030
2/1/2030
Market Rank(1)
Market
Status(2)
Full Power
Stations
Primary
Affiliation(3)
Low Power Stations /
Multicast Channels
Other Affiliation(3)(4)
FCC License
Expiration Date
Erie, PA
O&O
LSA
WJET
WFXP(5)
ABC
FOX
WJET-D2, D3, D4
WFXP-D2, D3, D4
Laff, ION Mystery, Cozi TV
GRIT, Bounce, Antenna TV
(23)
Terre Haute, IN
O&O
LSA
WTWO
WAWV(5)
NBC
ABC
WTWO-D2, D3, D4
WAWV-D2, D3, D4
Laff, ION Mystery, Antenna TV
GRIT, Bounce, Rewind TV
8/1/2029
8/1/2029
Binghamton, NY
O&O
O&O
WIVT
ABC
WIVT-D2, D3, D4
WBGH-CD, D2
NBC, Laff, ION Mystery
NBC, ABC
(23)
Wheeling, WV
O&O
WTRF
CBS
WTRF-D2, D3, D4
MNTV, ABC, ION Mystery
10/1/2028
Billings, MT
O&O
LSA
KSVI
KHMT(5)
ABC
FOX
KSVI-D2(6), D3, D4
KHMT-D2, D3, D4
The CW, ION Mystery, Antenna TV
Court TV, Laff, ION
4/1/2030
(23)
Beckley, WV
O&O
WVNS
CBS
WVNS-D2
FOX
10/1/2028
Abilene, TX
O&O
LSA
KTAB
KRBC(5)
CBS
NBC
KTAB-D2, D3, D4
KRBC-D2, D3, D4
Telemundo, ION Mystery, ION
GRIT, Laff, Bounce
(23)
Hattiesburg, MS
O&O
WHLT
CBS
WHLT-D2, D3, D4
The CW, ION, ION Mystery
6/1/2029
Rapid City, SD
O&O
KCLO
CBS
KCLO-D2, D3, D4
The CW, ION, ION Mystery
(23)
Dothan, AL
O&O
WDHN
ABC
WDHN-D2, D3, D4
ION Mystery, Laff, Antenna TV
4/1/2029
Utica, NY
O&O
O&O
LSA
WFXV
WUTR(5)
FOX
ABC
WFXV-D2, D3
WPNY-LP
WUTR-D2, D3, D4
ION Mystery, Laff
MNTV
MNTV, GRIT, Bounce
(23)
Clarksburg, WV
O&O
WBOY
NBC
WBOY-D2, D3, D4
ABC, ION Mystery, Laff
10/1/2028
Jackson, TN
O&O
WJKT
FOX
WJKT-D2, D3, D4
ION Mystery, Laff, GRIT
8/1/2029
Elmira, NY
O&O
WETM
NBC
WETM-D2, D3, D4
Antenna TV, Laff, ION Mystery
(23)
Watertown, NY
O&O
WWTI
ABC
WWTI-D2, D3, D4
The CW, Laff, ION Mystery
(23)
Marquette, MI
O&O
WJMN
MNTV
WJMN-D2, D3, D4
ION Mystery, Laff, Bounce
10/1/2029
Alexandria, LA
O&O
WNTZ
FOX
WNTZ-D2, D3, D4
Bounce, ION Mystery, Laff
6/1/2029
Grand Junction, CO
O&O
O&O
O&O
LSA
KREX
KREY(22)
KFQX(5)
CBS
CBS
FOX
KREX-D2, D3, D4
KREY-D2, D3, D4
KGJT-CD
KFQX-D2, D3, D4
Laff, MNTV, Bounce
FOX, ION Mystery, GRIT
MNTV
CBS, ION Mystery, GRIT
4/1/2030
4/1/2030
4/1/2030
(23)
San Angelo, TX
O&O
LSA
KLST
KSAN(5)
CBS
NBC
KLST-D2, D3, D4
KSAN-D2, D3, D4
ION Mystery, GRIT, Antenna TV
Laff, Bounce, ION
(23)
6/1/2029
(1)Market rank refers to ranking the size of the DMA in which the station is located in relation to other DMAs. Source: 2023-2024 Nielsen Local Television Market Universe Estimates, as published by The Nielsen Company.
(2)O&O refers to stations that we own and operate. LSA, or local service agreement, is the general term we use to refer to a contract under which we provide services utilizing our employees to a station owned and operated by an independent third-party. Local service agreements include TBAs, SSAs, JSAs, LMAs and outsourcing agreements. For further information regarding the LSAs to which we are a party, see Note 2 to our Consolidated Financial Statements in Part IV, Item 15(a) of this Annual Report on Form 10-K.
(3)Affiliation denoted “The CW” reflects affiliation with The CW or The CW Plus.
(4)Antenna TV and Rewind TV are digital multicast networks owned and operated by Nexstar. The other affiliations for our digital multicast channels are owned by independent third parties.
(5)These stations and related multicast channels are owned by Mission.
(6)WPHL, KRON, WTTA, KAUT and KSVI-D2 became affiliates of the CW Network on September 1, 2023.
(7)Although WDVM is located within the Washington, D.C. DMA, its signal does not reach the entire Washington, D.C. metropolitan area. WDVM serves the Hagerstown, MD sub-market within the DMA. WDVM is the only commercial station licensed in the city of Hagerstown.
(8)In January 2024, Nexstar entered into a time brokerage agreement with KAZT-TV. KAZT became an affiliate of the CW Network on February 1, 2024.
(9)These stations are operating under channel sharing arrangements with another Company station in the same market.
(10)Nexstar acquired WSNN-LD on July 20, 2023.
(11)Nexstar acquired KUSI-TV from McKinnon Broadcasting on August 31, 2023.
(12)KNVA is owned by 54 Broadcasting, a subsidiary of Vaughan Media LLC (“Vaughan”).
(13)KREZ and KBIM operate as satellite stations of KRQE.
(14)These stations and related multicast channels are owned by Vaughan.
(15)KHAW and KAII operate as satellite stations of KHON. KGMD and KGMV are satellites of KHII.
(16)KSNC, KSNG and KSNK operate as satellite stations of KSNW.
(17)These stations and related multicast channels are owned by White Knight Broadcasting (“White Knight”).
(18)KDLO and KPLO operate as satellite stations of KELO.
(19)WYZZ is owned by Cunningham Broadcasting Corporation.
(20)WEUX operates as a satellite station of WLAX.
(21)KXMB and KXMD operate as satellite stations of KXMC.
(22)KREY operates as a satellite station of KREX.
(23)Application for renewal of license was submitted timely to the FCC. Under the FCC’s rules, the license expiration date is automatically extended pending FCC review of and action on the renewal application.
Network Affiliations
All, except three, of the full power television stations that we own and operate, program or provide sales and other services to are currently affiliated with a network pursuant to an affiliation agreement. The agreements with CBS, FOX, NBC, ABC, and The CW are the most significant to our operations. The current terms of these agreements expire as discussed below:
Network
Affiliation
Expiration Date
CBS
49 agreements expire in June 2024.
NBC
35 agreements expire in December 2024.
The CW
Of the 28 agreements, 27 expire in August 2025 and one(1) expires in December 2026.
MNTV
15 agreements expire in August 2025.
FOX
Of the 42 agreements, 41 expire in August 2026 and one(1) expires in December 2024.
ABC
29 agreements expire in December 2026.
(1)This affiliation agreement is owned by a station to which we provide sales and other services. We do not consolidate this station in our financial statements due to lack of a deemed controlling financial interest under U.S. GAAP.
Each affiliation agreement provides the affiliated station with the right to broadcast all programs transmitted by the network with which it is affiliated. In exchange, the network receives affiliation fees from us and has the right to sell a substantial majority of the advertising time during these broadcasts. We expect the network affiliation agreements listed above to be renewed upon expiration.
Networks
We own, operate or have an ownership interest in the following:
Network / Entity
Network
Type
Description
% Owned by
Nexstar
U.S. TV
Households Reached (1)
(in millions)
% of
U.S. TV Households (1)
(Broadcast)
% of
Multi-channel Households (1)
(PayTV)
The CW Network
Broadcast
Fifth major broadcast network in the U.S.
75%
100%
--
NewsNation
PayTV
National cable news network
100%
--
92%
Antenna TV
Broadcast
Multicast entertainment network
100%
100%
--
REWIND TV
Broadcast
Multicast entertainment network
100%
66(2)
53%(2)
--
TV Food Network
PayTV
Food Network and Cooking Channel
31.3%
70 and 34
--
94% and 45%
(1)Source: Nielsen, December 2023
(2)Source: Internal estimates
The CW. The CW is one of America’s major broadcast networks and reaches 100% of US television households. The CW delivers 15 hours of primetime entertainment programming and three hours of children’s programming per week in addition to over 300 hours of sports per year as the broadcast home to LIV Golf, ACC football and basketball games, Inside the NFL, WWE NXT beginning in 2024 and NASCAR Xfinity Series beginning in 2025. For its smaller market affiliates, CWPlus supplements The CW programming with additional syndicated content to provide 24 hours of programming, seven days per week. The fully ad-supported CW App, with more than 100 million downloads to date, is available for free to consumers on all major platforms and is home to the latest episodes and seasons of The CW’s primetime programming, live streaming of LIV Golf tournaments and a library of entertaining film and television content for on-demand viewing.
NewsNation. NewsNation is a national cable news network which primarily delivers national news programming supplemented by quality television series. NewsNation is the fastest-growing national cable news network in primetime reaching 69 million television households across the United States. Validated by independent watchdog groups, NewsNation is America’s source for engaging and unbiased news, which reflects the full range of perspectives across the country. The network draws on the local and national expertise of Nexstar’s 6,000 journalists in 110 newsrooms across the country. NewsNation is available on every major cable and satellite provider, streaming platforms including YouTubeTV, Hulu, DirecTV Stream, FuboTV and Sling, online at www.newsnationnow.com, and on the NewsNationNow app available on Android and iOS.
Antenna TV and REWIND TV. Antenna TV and REWIND TV are multicast networks reaching 100% and over 50% of U.S. television households. The networks primarily air sitcom hits from the 1950s through the 1990s.
TV Food Network. We also hold a 31.3% interest in TV Food Network, which annually distributes significant cash flow to us. TV Food Network operates two 24-hour television networks, Food Network and Cooking Channel, offering quality television, video, internet and mobile entertainment and information focusing on food and entertaining. During 2023, we received cash distributions from TV Food Network totaling $270 million. Our partner in TV Food Network is Warner Bros. Discovery, Inc., which owns a 68.7% interest in TV Food Network and operates the networks on behalf of the partnership.
Digital Assets
Our digital businesses include video and display advertising platforms that are delivered locally or nationally through our own and various third-party websites, mobile and over-the-top (“OTT”) applications, other digital media solutions to media publishers and advertisers and a consumer product reviews platform. Our digital assets include 140 local websites, 278 mobile applications, 25 connected television applications, six free-ad supported television (“FAST”) channels representing content from our local television stations, The CW, NewsNation, The Hill, and BestReviews, and a suite of advertising solutions.
The Hill. The Hill is the nation’s leading digital-first political news brand and the definitive source for non-partisan political news and information. Inside the Beltway it’s known as an essential, agenda-setting read for lawmakers and influencers. Beyond the Capitol, millions of Americans turn to The Hill to decode how events in Washington will impact their communities and lives.
BestReviews. BestReviews is a leading consumer product recommendations company which simplifies the way consumers buy products and services across thousands of categories by independently researching, analyzing, and testing products and recommending the best picks. BestReviews monetizes its content through a revenue share model with its retail partners against all sales generated by BestReviews.
Operating Model
Our primary sources of revenue include contractual distribution revenue from retransmission consent and carriage agreements with MVPDs, such as cable and satellite providers, and OVDs, companies that provide video content through internet streaming either directly or via our network affiliation partners, as well as affiliation fees from local affiliates of The CW; the sale of commercial air time by the stations to local advertisers; the sale of commercial airtime by the stations and by our broadcast and cable networks to national advertisers; the sale of advertising on the stations’ websites, on our other owned or third party websites, and through mobile and OTT applications and other digital advertising solutions.
Our primary operating expenses include programming, newsgathering, production and promotion, employee salaries and benefits, sales commissions, digital cost of goods sold and content creation costs, and other administrative and corporate expenses. A large percentage of the costs involved in our operations is relatively fixed.
We seek to grow our revenue, net income, EBITDA and cash flow by continuing to provide high quality programming that attracts and engages audiences as our reach and consumer engagement are important to our distribution partners and advertisers. We use our industry-leading scale to assist us in securing distribution revenue streams, to provide advertisers with solutions across geographies and media types to engage both local and national audiences at scale and to leverage costs against a broader platform. In addition, we plan to continue to acquire or invest in businesses that can benefit from our scale, asset mix and record of management and cost discipline.
Distribution
We receive compensation from cable, satellite and other MVPDs and OVDs in return for our consent to the retransmission of the signals of our television stations and the carriage of NewsNation. Distribution revenues primarily represent payments from the MVPDs and OVDs and are typically based on the number of subscribers they have. Our successful negotiations related to these distribution agreements produce meaningful recurring revenue streams. We also generate distribution revenues from programmers who lease the use of our spectrum in selected local markets to air their content on our multicast streams.
Advertising
Our advertising revenue is primarily derived from the sale of local and national advertising on our stations, networks, websites, apps and other digital platforms or via third party media.
Advertising revenue is positively affected by a strong economy. Conversely, declines in advertising budgets of advertisers, particularly in recessionary periods, adversely affect the broadcast industry and, as a result, may contribute to a decrease in our advertising revenue. In even-numbered years we generate substantial advertising revenue from the political advertising we sell to candidates, political action committees and political parties. Advertising revenue is also positively affected by certain events such as the Olympic Games or the Super Bowl. Advertising revenue is generally highest in the second and fourth quarters of each year, due in part to increases in consumer advertising in the spring and retail advertising in the period leading up to, and including, the holiday season.
Local advertising is sold by each station’s local sales staff who call upon advertising agencies and local businesses. Compared to revenue from national advertising accounts, revenue from local advertising is generally more stable and predictable. In 2023, national and political advertising was sold through third party national sales representative firms which call upon advertising agencies. Beginning in January 2024, our national advertising is sold through our national sales division. We continue to sell our political advertising inventory through third party national sales representative firms. Digital advertising that is not sold through our local and national sales teams is typically sold via programmatic exchanges.
Competition
Competition in the television industry takes place on several levels: competition for audience, competition for programming and competition for advertising.
Audience. We compete for audience based on program popularity. The popularity of our programming has an effect on the rates we can secure from our distributors and a direct effect on the advertising rates we can charge our advertisers. We compete against other broadcast television programming, cable and satellite television programming as well as the direct-to-consumer programming provided via a variety of streaming services, including some of the broadcast television networks with which our stations are affiliated. Other sources of competition for audience include the internet, gaming devices, home entertainment systems and video-on-demand. The CW, our broadcast television network, competes with other broadcast networks and other video programming for viewers and NewsNation, our growing national cable news network, competes with other established national news networks such as CNN, FOX News and MSNBC for viewers.
Programming. Our local television stations compete for syndicated programming from national program distributors or syndicators and compete to secure broadcast rights for regional and local sporting events. We compete against in-market broadcast station operators, cable networks and streaming services for exclusive access to this programming in our markets. In a different way, our local stations also compete with other stations in their markets to provide exclusive news stories and unique features such as investigative reporting and coverage of community events to their local audience. The CW competes against other broadcast television and cable networks as well as other video providers, such as direct-to-consumer streaming platforms for television content. NewsNation competes against other cable news networks for talent and stories.
Advertising. Our stations compete for advertising revenue with other television stations in their respective markets and other advertising media such as online media (e.g., Google, Meta, Tiktok, Snapchat, etc.), OVDs, MVPDs, radio stations, newspapers, outdoor advertising, and direct mail, among others. Competition for advertising dollars in the broadcasting industry occurs primarily within individual markets. Generally, a television broadcast station in a particular market does not compete with stations in other market areas. The CW also competes for advertising revenue with other broadcast networks and other distribution technologies. NewsNation also competes for advertising revenue with other advertising media and with other established national networks such as CNN, FOX News and MSNBC.
Federal Regulation
Television broadcasting is subject to the jurisdiction of the Federal Communications Commission (the “FCC”) under the Communications Act of 1934, as amended (the “Communications Act”). The following is a brief discussion of certain provisions of the Communications Act and the FCC’s regulations and policies that affect our operations. These rules are subject to change, which may affect our operations.
FCC Licenses, Renewals and Transfers
License Grant and Renewal. The Communications Act requires broadcast stations to operate under licenses issued by the FCC. Television broadcast licenses are granted for a maximum term of eight years and may be renewed upon application to the FCC. The FCC grants an application for license renewal if the station served the public interest, the licensee did not commit any serious violations of the Communications Act or the FCC’s rules and the licensee committed no other violations which, taken together, would constitute a pattern of abuse. A majority of renewal applications are routinely granted under this standard. We consistently have received renewals and approvals in the past and are permitted to continue operations when renewal is delayed; however, there are no assurances that this will be the case in the future.
Station Transfer. The Communications Act prohibits the assignment or the transfer of control of a broadcast station’s FCC license without prior FCC approval.
Foreign Ownership Restrictions
The Communications Act limits the extent of non-U.S. ownership of companies that own U.S. broadcast stations, generally prohibiting more than 20% non-U.S. ownership (by vote and by equity) in a U.S. broadcast licensee or more than 25% indirect foreign ownership or control of such licensee through a parent company. The FCC will entertain and may authorize, on a case-by-case basis, proposals to exceed the 25% indirect foreign ownership limit in broadcast licensees.
Multiple Ownership Rules
The FCC multiple ownership rules restrict the number of television stations in which a single person or entity may have an “attributable interest.”
Ownership Attribution. For purposes of determining compliance with the multiple ownership rules, the FCC rules consider the “attributable interests” in a broadcast station licensee held by an individual or entity. The following are considered “attributable interests”: (i) for corporations, officership, directorship and voting stock interests of 5% or more (20% or more in the case of certain passive investors), (ii) for partnerships and limited liability companies, any limited partnership interest or limited liability company interest, unless properly “insulated” from involvement in the partnership’s media activities, and any general partnership interest, and (iii) more than 33% of a licensee’s total assets (defined as total debt plus total equity), if the holder of such interest also provides over 15% of the station’s total weekly broadcast programming or has an attributable interest in another media entity in the same market which is subject to the FCC’s ownership rules. If a shareholder of Nexstar holds a voting stock interest of 5% or more (20% or more in the case of certain passive investors), we must report that shareholder, its parent entities, and attributable individuals and entities of both, as attributable interest holders in Nexstar.
Local Television Multiple Ownership (Duopoly) Rule. Under the local television multiple ownership, or “duopoly,” rule, a single entity is allowed to own or have attributable interests in two television stations in a DMA if (i) the two stations do not have overlapping service areas, or (ii) at least one of the two stations is not ranked among the top four stations in the DMA in terms of audience share (subject to certain exceptions based on a case-by-case determination). The duopoly rule also allows the FCC to consider waivers to permit the ownership of a second station, where otherwise prohibited, where the second station has failed or is failing or unbuilt.
In certain markets, the Company owns and operates both full-power and low-power television (“LPTV”) broadcast stations. The FCC’s rules and policies regarding ownership of television stations in the same market and nationally generally apply only to full-power television stations. In 2023, the FCC extended the duopoly rule to prohibit, in certain circumstances, the acquisition of a network affiliation that would establish a “top four” combination involving a network-affiliated LPTV station or digital multicast stream.
National Television Multiple Ownership Rule. The FCC’s rules limit the percentage of U.S. television households which a party may reach through its attributable interests in television stations to 39%. When calculating a party’s nationwide aggregate audience coverage, the ownership of a UHF station is counted as 50% of a market’s percentage of total national audience. In December 2017, the FCC initiated a proceeding to broadly reexamine its national television ownership rule and the proceeding remains open.
Local Service Agreements. The FCC applies the local television ownership limits to a non-owned station when the owner of a station in the same market provides more than 15% of the second station’s weekly broadcast programming. However, local marketing agreements entered into prior to November 5, 1996 (“grandfathered LMAs”) are exempt from this attribution rule until the FCC determines otherwise. This “grandfathering” is subject to possible extension or termination in a future FCC review. Nexstar is currently a party to certain grandfathered LMAs.
Under current FCC rules, joint sales agreement (“JSAs”) and shared services agreements (“SSAs”) between independently owned television stations that do not exceed the programming threshold noted above are non-attributable but must be publicly disclosed, and the FCC may in the future consider regulations with respect to such agreements. Nexstar is currently a party to certain JSA and SSA agreements whereby it provides services to independently owned stations.
Quadrennial Review of Media Ownership Rules. The FCC is required to review its media ownership rules every four years and to eliminate those rules it finds are no longer “necessary in the public interest as a result of competition.” In December 2023, the FCC issued an order concluding its 2018 quadrennial review. The order retained the local television ownership rule without deregulatory changes while extending the rule to prohibit, in certain circumstances, the acquisition of a network affiliation that would establish a “top four” combination involving a network affiliated LPTV station or digital multicast stream. The FCC’s 2018 quadrennial review order is subject to appeal, and in addition, the 2022 quadrennial review is currently pending. Thus, the media ownership rules may be subject to change in response to current or future quadrennial reviews or other proceedings.
Distribution by Multichannel Video Programming Distributors (“MVPDs”) and Online Video Distributors (“OVDs”)
MVPD Carriage of Local Television Signals. Broadcasters may obtain carriage of their television stations’ signals on cable, satellite and other MVPDs through either mandatory carriage or through “retransmission consent.” Every three years all stations must formally elect either mandatory carriage (“must-carry” for cable distributors and “carry one-carry all” for satellite television providers) or retransmission consent. The next election must be made by October 1, 2026 and will be effective January 1, 2027. Mandatory carriage elections require that the MVPD carry one station programming stream and related data in the station’s local market, subject to limited exceptions. MVPDs do not pay a fee to stations that elect mandatory carriage. We and our partners have elected “retransmission consent” for all of our stations.
A broadcaster, like Nexstar, that elects retransmission consent waives its mandatory carriage rights, and the broadcaster and the MVPD must negotiate terms for carriage of the station’s signal. If a broadcaster elects to negotiate retransmission terms, it is possible that the broadcaster and the MVPD will not reach agreement and that the MVPD will not carry the station’s signal. Pursuant to the FCC rules and federal statutory law all broadcasters and MVPDs must conduct retransmission consent negotiations in “good faith,” and a broadcaster may not undertake such negotiations for third parties including VIEs in markets where that broadcaster also owns a television station. MVPDs and broadcasters may file FCC complaints against each other for violations of the good faith negotiation rules, and such complaints have been filed against Nexstar in the past. We cannot predict the impact that any such complaints may have on our operations.
MVPDs have actively sought to change the regulations under which retransmission consent is negotiated before both the U.S. Congress and the FCC in order to increase their bargaining leverage with television stations, and there are still-open FCC proceedings to review these regulations.
Certain OVDs stream broadcast programming over the internet. In December 2014, the FCC issued a Notice of Proposed Rulemaking proposing to interpret the term “MVPD” to encompass OVDs that make available for purchase multiple streams of video programming distributed at a prescheduled time and seeking comment on the effects of applying MVPD rules to such OVDs. The proceeding remains open.
Broadcast Transmission Standard (ATSC 3.0)
In November 2017, the FCC adopted rules to permit television broadcasters to voluntarily broadcast using a new broadcast television transmission standard developed by the Advanced Television Systems Committee, Inc., also referred to as “ATSC 3.0” or “NEXTGEN TV.” The ATSC 3.0 standard provides for a more efficient use of spectrum, which could enable us to provide additional services to consumers and businesses, including additional content, interactive television, signal encryption and data transmission services. Nexstar and its partners have adopted the ATSC 3.0 technology in their stations covering over 50% of U.S. television households.
Because ATSC 3.0 is not compatible with existing television equipment, the FCC requires the stations which have adopted the ATSC 3.0 technology to continue broadcasting a substantially similar signal in the existing standard until the FCC phases out the requirement. In June 2023, the FCC issued a Third Report and Order and Fourth Further Notice of Proposed Rulemaking that extends the sunset for certain transition requirements from July 2023 to July 2027. In addition, in June 2020, the FCC adopted a Declaratory Ruling and Notice of Proposed Rulemaking declaring that local and national ownership restrictions do not apply to non-video services provided on a broadcaster’s ATSC 3.0 spectrum.
Other FCC Broadcast Regulations and Enforcement
The FCC continues to strictly enforce its regulations concerning indecency, sponsorship identification, political advertising, good faith retransmission consent negotiation, unauthorized assignments and transfers of control, multiple ownership, children’s television, environmental concerns, emergency alerting and information, equal employment opportunity, technical operating matters, antenna tower maintenance, and other matters. The FCC may impose substantial forfeitures or, in extreme cases, revoke licenses if it determines that its rules have been violated.
Human Capital Management
Values. Our key human capital management objectives are to attract, develop, and retain top industry talent that reflects the diversity of the communities in which we operate and provide services. We encourage every individual’s contribution and personal growth and foster work environments that provide personal pride through job satisfaction and a balanced life. We embrace the communities in which we operate and promote open communications, innovation and creativity.
Engagement and Opportunities. With markets ranging from small to large to national, we offer a broad range of opportunities for every experience level, including for those who are just starting their broadcasting career or are ready to move to a larger market or onto the national stage. Our market diversity allows us to give our employees room to grow and progress in their careers. Our management team supports a culture of developing future leaders from our existing workforce, enabling us to promote from within for many leadership positions. As of December 31, 2023, our voluntary retention rate for employees was approximately 82%.
Compensation and Benefits. We offer our employees a broad range of company-paid benefits and we believe our compensation package and benefits are competitive with others in our industry. Our employee wages are competitive and consistent with employee positions, experience, knowledge and location. Annual wage increases and incentive payments are based on merit and are communicated to employees as a part of the annual review process.
Diversity and Inclusion. We value diversity at all levels and continue to focus on extending our diversity and inclusion initiatives across our entire workforce. We believe a diverse workforce fosters innovation and cultivates an environment of unique perspectives. We encourage a culture of diversity and inclusion so our employees feel respected and do not feel discriminated against. To help us achieve our diversity goals, our Diversity and Inclusion Council, a ten-member group of rotating members, regularly meets and advises senior management on ideas and initiatives to help diverse and inclusive workplace, where diverse talent can flourish and build a career. In addition, we have five Employee Resource Groups in the categories of Latinx, Women, African American, Veterans and LGBTQ+ designed to bring together employees who share similar cultures, backgrounds, and/or interests, as well as those employees who wish to provide support to that group. In order to ensure accountability in making progress in our diversity goals, a portion of our managers’ bonuses are tied to diversity metrics in their markets.
As of December 31, 2023, approximately 41% and 30% of our employees and our management (Vice Presidents and above), respectively, were women. In the U.S., approximately 26% and 11% of our employees and our management, respectively, were racially/ethnically diverse. This compares to approximately 40% of the U.S. population which is racially/ethnically diverse (source: 2020 United States Census Bureau population).
Training and Mentorship. We are committed to developing the talents of our employees and provide our employees workplace training. Our catalog of courses includes harassment prevention, diversity/equity/inclusion, ethics, managing bias, supervisor/manager skills, and health-related safety. In addition, we have a mentorship program that matches mentors and mentees across the company and provides the pairs with a 12-topic curriculum covering skills such as communications, networking, work/life balance, and goal setting. Selected Nexstar employees also participate in annual training to ensure understanding of antitrust laws and how they apply to Nexstar and media sales training program provided by The Center for Sales Strategy, a third-party vendor.
Safety and Health. We are committed to providing a safe and healthy workplace for our employees. All employees are required to comply with our safety rules and are expected to actively contribute to making our company a safer place to work. Employees must immediately report accidents, injuries, and unsafe equipment, practices or conditions to a supervisor or other designated person. Threats or acts of violence or physical intimidation are prohibited and subject to disciplinary action up to and including termination of employment.
Employees. As of December 31, 2023, we had a total of 13,294 employees, comprised of 11,877 full-time and 1,417 part-time employees. As of December 31, 2023, 1,944 of our employees were covered by collective bargaining agreements. We believe that our employee relations are satisfactory, and we have not experienced any work stoppages at any of our facilities. However, we cannot assure you that our collective bargaining agreements will be renewed in the future, or that we will not experience a prolonged labor dispute, which could have a material adverse effect on our business, financial condition or results of operations.
Community Outreach. We pride ourselves on the opportunities we provide for our employees to give back to their communities. At the local level, our stations are actively involved in over 1,775 community outreach initiatives in 2023. Nexstar and its partner stations work with local community groups to increase awareness, raise money and otherwise assist these local groups with their missions. Stations run promotions and air content related to the initiative and station employees participate in local events. On a companywide basis, Nexstar engages in a variety of initiatives as well, including, among others, partnering with Feeding America, the nation’s largest domestic hunger relief organization by providing air-time and financial support from 2021 - 2023; Project Roadblock, a national multiplatform program aimed at preventing drunk driving, by donating airtime and news coverage to the issue; and Remarkable Women, Nexstar’s own initiative to celebrate local women to inspire, lead and pave the way for other women to succeed, by airing content and contributing to the winners’ charitable organizations of her choice. In addition, since our 20th anniversary in June 2016 (with the exception of 2020), we organized an annual Founder’s Day of Caring, an employee-driven effort focused on local non-profits and charities. Across the country our employees take the day to contribute thousands of hours of community services. In 2023, our Founder’s Day initiatives provided nearly 17,500 hours of service in one day to the communities served by Nexstar TV stations.
Legal Proceedings
From time to time, we are involved in litigation that arises from the ordinary operations of business, such as contractual or employment disputes or other general actions. In the event of an adverse outcome of these proceedings, we believe the resulting liabilities would not have a material adverse effect on our financial condition or results of operations. See Note 16 to our Consolidated Financial Statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K, which is incorporated herein by reference.
Available Information
We file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers, including us, that file electronically with the SEC. The address for the SEC’s website is http://www.sec.gov. Due to the availability of our filings on the SEC website, we do not currently make available our filings on our internet website. Upon request, we will provide free copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q and any other filings with the SEC. Requests can be sent to Nexstar Media Group, Inc., Attn: Investor Relations, 545 E. John Carpenter Freeway, Suite 700, Irving, TX 75062. Additional information about us, our stations and the stations we program or provide services to can be found on our website at http://www.nexstar.tv. We do not incorporate the information contained on or accessible through our corporate website into this Annual Report on Form 10-K.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors
You should carefully consider the risks described below and all of the information contained in this document. The risks and uncertainties described below are not the only risks and uncertainties that the Company faces. Additional risks and uncertainties not presently known to the Company or that the Company currently deems immaterial may also impair the Company’s business operations. If any of those risks occur, the Company’s business, financial condition and results of operations could suffer. The risks discussed below also include forward-looking statements, and the Company’s actual results may differ substantially from those discussed in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” for further information.
Summary Risk Factors
Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flows, and prospects. These risks are discussed more fully below and include, but are not limited to:
Risks Related to Our Operations
•Our distribution revenues and operating results may be adversely affected by, among other factors, declining MVPD subscribers and our inability to renew expiring distribution agreements on favorable terms or at all;
•Our station revenues and operating results may be adversely affected if we are unable to renew our network affiliation agreements on favorable terms, or at all;
•Our revenue and operating results may be adversely affected if we are unable to retain our largest customers, which account for a significant percentage of our total revenue, on favorable terms, or at all;
•Our advertising revenue and operating results may be affected by economic downturns, geopolitical events and other factors outside of our control;
•Because a significant percentage of our operating expenses are fixed, a relatively small decrease in revenue could have a significant negative impact on our operating results;
•Our growth may be limited if we are unable to implement an acquisition strategy and our operating results may be adversely affected if we are unable to successfully integrate any future acquisition;
•Our substantial debt and related interest expense could limit our ability to reinvest in the business, make acquisitions and/or return capital to shareholders;
•We may not be able to generate sufficient cash flow to meet our debt service requirements;
•We may be required to cease certain station operations if the FCC denies renewal of any of our station licenses.
•The financial performance of our equity method investments and the performance of third-party services providers, upon which we rely but do not control, could adversely impact our results of operations;
•The loss of the services of our chief executive officer could disrupt management of our business and impair the execution of our business strategies;
•Our operating results could be adversely affected if the owners of the VIEs make decisions regarding the operation of their respective stations that adversely impact their operating results and reduce payments due to us under our local service agreements;
•Future impairment charges could adversely affect our operating results;
•Changes in deferred tax asset assets or valuation allowances as a result of tax law changes could affect our operating results;
•We may face additional tax liabilities stemming from proposed and ongoing tax audits;
•Our pension and postretirement benefit plan obligations may be increased by a declining stock market and lower interest rates;
•Adverse results from litigation or governmental investigations involving us could impact our business practices and operating results;
•Any decrease in our dividend payments or suspension of our dividend payments or stock repurchases could cause our stock price to decline;
•We may not be able to adequately protect the intellectual property and other proprietary rights that are material to our business; and
•Cybersecurity risks could adversely affect our operating effectiveness and operating results.
Risks Related to Our Industry
•Intense competition in the television industry and alternative forms of media could limit our growth and profitability;
•New or changed federal statutes, legislation and regulations could significantly impact our operations or the television broadcasting industry as a whole; and
•We are subject to foreign ownership limitations which limit foreign investments in us.
Risks Related to Tribune Publishing’s Spin-Off
•Tribune may be required to pay substantial U.S. federal income taxes if the Tribune Publishing spin-off does not qualify as a tax-free distribution under Section 355 of the Internal Revenue Code;
Risks Related to Our Operations
Our distribution revenues and operating results may be adversely affected by, among other factors, declining MVPD subscribers and our inability to renew expiring distribution agreements on favorable terms or at all.
A significant portion of Nexstar’s revenue comes from its retransmission consent and carriage agreements with MVPDs (mainly cable and satellite television providers) and OVDs. These agreements permit the distributors to retransmit our stations’ and our cable and broadcast networks’ signals to their subscribers in exchange for the payment of compensation to us. If we are unable to renegotiate these agreements on favorable terms, or at all, the failure to do so could have an adverse effect on our business, financial condition, and results of operations. In addition, occasionally these negotiations result in a temporary removal of our stations from the distributor’s service which disruption could have an adverse effect on our operating results.
Though we are typically able to renegotiate our retransmission consent agreements on favorable terms, the payments due to us under these agreements are customarily based on a price per subscriber of the applicable distributor. In the past several years, the number of subscribers to MVPDs has declined as the growth of direct internet streaming of video programming to televisions and mobile devices has led consumers to discontinue their cable or satellite service subscriptions. As our retransmission consent agreements include payment terms by subscriber numbers, if the rate of reductions in the number of MVPD subscribers increases, this could also have an adverse effect on our business revenues, financial condition and results of operations. Also, refer to “Risks Related to Our Industry-Intense competition in the television industry and alternative forms of media could limit our growth and profitability.”
Our affiliation agreements with the “Big 4” broadcast networks (ABC, CBS, NBC and FOX) include terms that limit our ability to grant retransmission consent rights to OVDs and other service providers that provide video streaming to consumers. As a result, the Big 4 networks generally negotiate directly with OVDs for carriage of their local affiliate stations, including certain of our stations. The terms the networks negotiate may be unfavorable or unacceptable to us, as a result of which we may receive reduced revenue from our stations’ carriage on OVDs or may choose not to permit an OVD’s carriage of our stations at all, which could materially reduce this revenue source to the Company if we cannot reduce network affiliation fees or generate additional revenue streams from other relationships we have with the Big 4 networks and OVDs, and could have an adverse effect on our business, financial condition and results of operations.
Our station revenues and operating results may be adversely affected if we are unable to renew our network affiliation agreements on favorable terms, or at all.
Due to the quality of the programming provided by the networks, stations that are affiliated with a network generally have higher ratings than unaffiliated independent stations in the same market. As a result, it is important for stations to maintain their network affiliations. All but three of the stations that we operate or provide services to have network affiliation agreements which have expiration/renewal dates at various times through December 2026. In order to renew certain of our affiliation agreements, we may be required to make increased payments to the networks and to accept other modifications of existing affiliation agreements. If any of our stations cease to maintain affiliation agreements with their networks for any reason, we would need to find alternative sources of programming, which may be less attractive to our audiences and more expensive to obtain. In addition, a loss of a specific network affiliation for a station may affect our retransmission consent payments, resulting in us receiving less retransmission consent fees. Further, some of our network affiliation agreements are subject to earlier termination by the networks under specified circumstances. For more information regarding these network affiliation agreements, see Item 1, “Business-Network Affiliations.”
Our revenue and operating results may be adversely affected if we are unable to retain our largest customers, which account for a significant percentage of our total revenue, on favorable terms, or at all.
During the years ended December 31, 2023, 2022 and 2021, the Company’s revenues from two customers exceeded 10%. Each of these customers represented approximately 12% and 14% for 2023, 10% and 11% for 2022, and 12% and 13% for 2021, of the Company’s consolidated net revenues. The loss of or disruption in our relationship with one or more of our major customers could have a material adverse effect on our business, operating results, or financial condition. In addition, any consolidation of our customers could reduce the number of customers to whom our services could be sold and increase our revenue concentration.
Our advertising revenue and operating results may be affected by economic downturns, geopolitical events and other factors outside of our control.
We derive a significant amount of our revenue from the sale of television and digital advertising. Our ability to sell advertising time depends on numerous factors that may be beyond our control, including: the health of the economy; the popularity of our programming, including trust in news organizations; fluctuations in pricing for advertising; the activities of our competitors; and the amount of demand for political advertising in election years. Because businesses generally reduce their advertising budgets during economic recessions or downturns, our reliance upon advertising revenue makes our operating results susceptible to prevailing economic conditions. In addition, our programming may not attract sufficient targeted viewership, and we may not achieve favorable ratings. Our ratings depend partly upon unpredictable and volatile factors beyond our control, such as viewer preferences, competing programming and the availability of other entertainment activities. A shift in viewer preferences could cause our programming not to gain popularity or to decline in popularity, which could cause our advertising revenue to decline. Further, we and the programming providers upon which we rely may not be able to anticipate, and effectively react to, shifts in viewer tastes and interests in our markets.
In addition, the Company may experience a loss of advertising revenue and incur additional broadcasting expenses due to preemption of our regularly scheduled programming by network coverage of a major global news event such as a war or terrorist attack or by coverage of local disasters such as tornados and hurricanes.
Because a significant percentage of our operating expenses are fixed, a relatively small decrease in revenue could have a significant negative impact on our operating results.
Our business is characterized generally by high fixed costs, primarily for debt service, broadcast rights and personnel. Other than commissions paid to our sales staff and outside sales agencies, our expenses do not vary significantly with an increase or decrease in advertising revenue. As a result, a relatively small change in advertising prices could have a disproportionate effect on our financial results. Accordingly, a minor shortfall in expected revenue could have a significant negative impact on our financial results.
Our growth may be limited if we are unable to implement an acquisition strategy and our operating results may be adversely affected if we are unable to successfully integrate any future acquisition.
Historically, we achieved much of our growth through acquisitions. We intend to continue our growth by selectively pursuing acquisitions of businesses that leverage our platform, scale and capabilities. Some of our competitors may have greater financial or management resources with which to pursue acquisition targets. Therefore, even if we are successful in identifying attractive acquisition targets, we may face considerable competition and our acquisition strategy may not be successful.
Current and future changes to rules and policies of the FCC and other regulatory authorities which limit the ownership of television stations may also make it more difficult for us to acquire additional television stations. Additionally, our television acquisitions over the past several years have significantly increased our national audience reach to a level that is at the national television ownership limit imposed by the Communications Act and FCC rules. This may restrict our future television station acquisitions and may require us to divest current stations in connection with any acquisition in order to comply with the national television ownership limit. For more information see “Federal Regulation.”
There are a number of risks associated with growing our business through acquisitions. For example, with any past or future acquisition, there is the possibility that: we may not be able to manage the increased reporting and administrative demands; we may not be able to successfully reduce costs, increase revenue or audience or realize anticipated synergies and economies of scale with respect to any acquired business; we may not be able to generate adequate returns on our acquisitions or investments; we may encounter and fail to address risks or other problems associated with or arising from our reliance on the representations and warranties and related indemnities, if any, provided to us by the sellers of acquired companies; an acquisition may increase our leverage and debt service requirements or may result in our assuming unexpected liabilities; our management may be reassigned from overseeing existing operations by the need to integrate the acquired business; we may experience difficulties integrating operations and systems, as well as company policies and cultures; we may be unable to retain and grow relationships with the acquired company’s key customers; we may fail to retain and assimilate employees of the acquired business; and problems may arise in entering new markets in which we have little or no experience. The occurrence of any of these events could have a material adverse effect on our operating results, particularly during the period immediately following any acquisition.
Our substantial debt and related interest expense could limit our ability to reinvest in the business, make acquisitions and/or return capital to shareholders.
As of December 31, 2023, the Company had $6.8 billion of debt, which represented 74.8% of the total combined capitalization. Of the Company’s $6.8 billion of debt, $4.1 billion is floating rate debt for which the Company pays interest based on a spread to current SOFR rates. As SOFR has increased, the Company’s interest expense has also increased, reducing the amount of cash flow from operations the Company has available to reinvest in its operations, make acquisitions or return to shareholders. The Company’s high level of debt could have other important consequences for its business, including: limiting the Company’s ability to borrow additional funds or obtain additional financing in the future; using cash from operations to reduce indebtedness instead of reinvesting in the business, making acquisitions or returning capital to shareholders; limiting the Company’s flexibility to plan for and react to changes in its business and its industry; and impairing our ability to withstand a general downturn in our business and place us at a disadvantage compared to our competitors that are less leveraged. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Material Cash Requirements” for disclosure of the approximate aggregate amount of principal indebtedness scheduled to mature.
The terms of the Company’s debt instruments contain various maintenance or other restrictive covenants customary for arrangements of these types. The restrictive covenants restrict our ability to, among other things incur additional debt and issue preferred stock; pay dividends and make other distributions; make investments and other restricted payments; make acquisitions; merge, consolidate or transfer all or substantially all of our assets; enter into sale and leaseback transactions; create liens; sell assets or stock of our subsidiaries; and enter into transactions with affiliates. Nexstar’s senior secured credit facility requires us to maintain or meet certain financial ratios, including a maximum consolidated first lien net leverage ratio of 4.25 to 1.00. Future financing agreements may contain similar, or even more restrictive, provisions and covenants. Because of these restrictions and covenants, management’s ability to operate our business at its discretion is limited, and we may be unable to compete effectively, pursue acquisitions or take advantage of new business opportunities, any of which could harm our business.
If we fail to comply with the restrictions in present or future financing agreements, a default may occur. A default could allow creditors to accelerate the related debt as well as any other debt to which a cross-acceleration or cross-default provision applies. A default could also allow creditors to foreclose on any collateral securing such debt.
The Company could also incur additional debt in the future. The terms of the Company’s senior secured credit facilities, as well as the indentures governing Nexstar’s senior unsecured notes, limit, but do not prohibit the Company from incurring substantial amounts of additional debt. To the extent the Company incurs additional debt, it would become even more susceptible to the leverage-related risks described above.
We may not be able to generate sufficient cash flow to meet our debt service requirements.
The Company’s ability to service its debt depends on its ability to generate the necessary cash flow. Generation of the necessary cash flow is partially subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond the Company’s control. The Company cannot assure you that its business will generate cash flow from operations, that future borrowings will be available to the Company under its current or any replacement credit facilities, or that it will be able to complete any necessary financings, in amounts sufficient to enable the Company to fund its operations or pay its debts and other obligations, or to fund its liquidity needs. If the Company is not able to generate sufficient cash flow to service its debt obligations, it may need to refinance or restructure its debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. Additional financing may not be available in sufficient amounts, at times or on terms acceptable to the Company, or at all. If the Company is unable to meet its debt service obligations, its lenders may determine to stop making loans to the Company, and/or the Company’s lenders or other holders of its debt could accelerate and declare due all outstanding obligations under the respective agreements, all of which could have a material adverse effect on the Company.
We may be required to cease certain station operations if the FCC denies renewal of any of our station licenses.
The FCC generally grants an application for license renewal if, during the preceding term, the station served the public interest, the licensee did not commit any serious violations of the Communications Act or the FCC’s rules, and the licensee committed no other violations of the Communications Act or the FCC’s rules which, taken together, would constitute a pattern of abuse. While a majority of renewal applications are routinely granted under this standard, if we fail to meet this standard the FCC may condition or shorten renewal or, in a worst case, deny a station’s license renewal application, resulting in termination of the station’s authority to broadcast. The Company expects the FCC to grant pending and future renewal applications for its stations in due course but cannot provide any assurances that the FCC will do so. See “Federal Regulation-FCC Licenses, Renewals and Transfers.”
The financial performance of our equity method investments and the performance of third-party services providers, upon which we rely but do not control, could adversely impact our results of operations.
We have significant investments in businesses (primarily our 31.3% interest in TV Food Network) that we account for under the equity method of accounting. For the year ended December 31, 2023, our income from equity investments from TV Food Network was $177 million and we received cash distributions of $270 million. If the change in earnings and distributions from our equity investments are material in any year, those changes may have a material effect on our net income, cash flows, financial condition and liquidity. We do not control the day-to-day operations of our equity method investments or have the ability to cause them to pay dividends or make other payments or advances to their stockholders, including us, and thus the management of these businesses could impact our results of operations and cash flows. Additionally, these businesses are subject to laws, regulations, market conditions and other risks inherent in their operations. Any of these factors could adversely impact our results of operations, our cash flows and the value of our investment.
In addition, we rely on a number of third parties service providers, including software providers and large technology companies, to enable or perform many core business operations, some of which are specialized services provided by small companies. If these providers are unable to meet our needs or change the way they perform their services, we could be adversely affected.
The loss of the services of our chief executive officer could disrupt management of our business and impair the execution of our business strategies.
We believe that our success depends upon our ability to retain the services of Perry A. Sook, our founder and Chief Executive Officer. Mr. Sook has been instrumental in determining our strategic direction and focus. The loss of Mr. Sook’s services could adversely affect our ability to manage effectively our overall operations and successfully execute current or future business strategies. On August 1, 2022, we extended Mr. Sook’s appointment as our Chief Executive Officer through March 31, 2026, with automatic renewal for successive one-year periods.
Our operating results could be adversely affected if the owners of the VIEs make decisions regarding the operation of their respective stations that adversely impact their operating results and reduce payments due to us under our local service agreements.
The VIEs are each 100% owned by independent third parties. We have entered into local service agreements with the VIEs, pursuant to which we provide services to their stations. In return for the services we provide, we receive substantially all of the consolidated VIEs’ available cash, after satisfaction of their operating costs and any debt obligations. In addition, Nexstar (excluding The CW) guarantees the full payment of all of the obligations incurred under one of our VIEs’ (Mission) senior secured credit facility in the event of default. See “Stations.”
In compliance with FCC regulations, the VIEs maintain complete responsibility for and control over programming, finances and personnel for their respective stations. As a result, the VIEs’ boards of directors and officers can make decisions with which we disagree and which could reduce the cash flow generated by these stations and, as a consequence, the amounts we receive under our local service agreements with the VIEs.
Future impairment charges could adversely affect our operating results.
As of December 31, 2023, $8.0 billion, or 66.2%, of the Company’s combined total assets consisted of goodwill and intangible assets, including FCC licenses and network affiliation agreements. During the fourth quarter of 2023, Nexstar recorded a $35 million impairment of goodwill and finite-lived intangible assets attributable to a digital business. The Company regularly tests its goodwill and other intangible assets for impairment. If the carrying amount of goodwill and intangible assets is revised downward due to impairment, such non-cash charge could materially affect the Company’s financial position and results of operations. See “Critical Accounting Estimates-Valuation of Goodwill and Intangible Assets.”
Changes in deferred tax assets or valuation allowances as a result of tax law changes could affect our operating results.
The Company currently has significant net deferred tax assets resulting from tax credit carryforwards, net operating losses and other deductible temporary differences that are available to reduce taxable income in future periods. Based on our assessment of the Company’s deferred tax assets, we determined that as of December 31, 2023, based on projected future income, approximately $185 million of the Company’s deferred tax assets, net of valuation allowance, primarily related to NOLs attributable to a consolidated VIE, will more likely than not be realized in the future. Should we determine in the future that these assets will not be realized, the Company will be required to record a valuation allowance in connection with these deferred tax assets and the Company’s operating results would be adversely affected in the period such determination is made. In addition, tax law changes could negatively impact the Company’s deferred tax assets. See “Critical Accounting Estimates-Income Taxes.”
We may face additional tax liabilities stemming from proposed and ongoing tax audits.
While we believe our tax positions and reserves are reasonable, the resolutions of certain tax issues related to a past transaction of Tribune Media Company (“Tribune”) are unpredictable and could negatively impact our effective tax rate, net income or cash flows for the period or periods in question. Specifically, we may be faced with additional tax liabilities as a result of our acquisition of Tribune for the transactions contemplated by an agreement, dated August 21, 2009, between Tribune and Chicago Entertainment Ventures, LLC (formerly Chicago Baseball Holdings, LLC) (“CEV LLC”), and its subsidiaries (collectively, “New Cubs LLC”), governing the contribution of certain assets and liabilities related to the business of the Chicago Cubs Major League Baseball franchise then owned by Tribune and its subsidiaries to New Cubs LLC, and related agreements thereto (the “Chicago Cubs Transactions”). We may also be faced with tax liabilities as a result of the federal income tax audits of Tribune for taxable years 2014 and 2015.
On June 28, 2016, the IRS issued Tribune a Notice of Deficiency which presented the IRS’s position that the gain with respect to the Chicago Cubs Transactions should have been included in Tribune’s 2009 taxable income. Accordingly, the IRS proposed a $182 million tax and a $73 million gross valuation misstatement penalty. During the third quarter of 2016, Tribune filed a petition in U.S. Tax Court to contest the IRS’s determination. After-tax interest on the aforementioned proposed tax and penalty through December 31, 2023 would be approximately $191 million. In addition, if the IRS prevails in its position, under the tax rules for determining tax basis upon emergence from bankruptcy, the Company would be required to reduce its tax basis in certain assets. The reduction in tax basis would be required to reflect the reduction in the amount of the Company’s guarantee of the New Cubs partnership debt which was included in the reported tax basis previously determined upon emergence from bankruptcy and subject to Tribune’s 2014 and 2015 federal income tax audits (described below).
On September 19, 2019, Tribune became a wholly owned subsidiary of Nexstar following Nexstar’s merger with Tribune. Nexstar disagrees with the IRS’s position that the Chicago Cubs Transactions generated taxable gain in 2009, the proposed penalty and the IRS’s calculation of the gain. If the IRS prevails in its position, the gain on the Chicago Cubs Transactions would be deemed to be taxable in 2009. We estimate that the federal and state income taxes would be approximately $225 million before interest and penalties. Any tax, interest and penalty due will be offset by tax payments made relating to this transaction subsequent to 2009. Tribune made approximately $154 million of tax payments prior to its merger with Nexstar.
A bench trial in the U.S. Tax Court took place between October 28, 2019 and November 8, 2019, and closing arguments took place on December 11, 2019. The Tax Court issued a separate opinion on January 6, 2020 holding that the IRS satisfied the procedural requirements for the imposition of the gross valuation misstatement penalty. The judge deferred any litigation of the penalty until a final determination was reached by the Tax Court or Court of Appeals.
On October 26, 2021, the Tax Court issued an opinion related to the Chicago Cubs Transactions, which held that Tribune’s structure was, in substantial part, in compliance with partnership provisions of the Code and, as a result, did not trigger the entire 2009 taxable gain proposed by the IRS. On October 19, 2022, the Tax Court entered the decision that there is no tax deficiency or penalty due in the 2009 tax year. On January 13, 2023, the IRS filed a notice of appeal to the U.S. Court of Appeals for the Seventh Circuit. On February 3, 2023, the Company filed a notice of cross-appeal. On February 15, 2024, the case was argued before the U.S. Court of Appeals for the Seventh Circuit. The Company expects a ruling from the Court of Appeals in the second half of 2024.
As of December 31, 2023, we believe the tax impact of applying the Tax Court opinion to 2009 and its impact on subsequent years is not material to the Company’s accounting for uncertain tax positions or to its Consolidated Financial Statements. Although management believes its estimates and judgments are reasonable, the timing and ultimate resolution are unpredictable and could materially change.
Prior to Nexstar’s merger with Tribune in September 2019, Tribune was undergoing a federal income tax audit for taxable years 2014 and 2015. In the third quarter of 2020, the IRS completed its audit of Tribune and issued a Revenue Agent’s Report which disallowed the reporting of certain assets and liabilities related to Tribune’s emergence from Chapter 11 bankruptcy on December 31, 2012. We disagree with the IRS’s proposed adjustments to the tax basis of certain assets and the related taxable income impact, and we are contesting the adjustments through the IRS administrative appeal procedures. If the IRS prevails in its position and after taking into account the impact of the Tax Court opinion, Nexstar would be required to reduce its tax basis in certain assets resulting in a $16 million increase in its federal and state taxes payable and a $70 million increase in deferred income tax liability as of December 31, 2023. In accordance with Accounting Standards Codification (“ASC”) Topic 740, the Company has reflected $11 million for certain contested issues in its liability for uncertain tax positions at December 31, 2023 and December 31, 2022.
Our pension and postretirement benefit plan obligations may be increased by a declining stock market and lower interest rates.
Nexstar has various funded, qualified non-contributory defined benefit retirement plans which cover certain employees and former employees. As of December 31, 2023, the pension benefit obligations for these qualified retirement plans were $1.7 billion. The qualified retirement plans also had $1.5 billion in total net assets available, or underfunded by approximately $171 million, to pay benefits to participants enrolled in the plans as of December 31, 2023. Nexstar was not required and did not make contributions to its qualified pension benefit plans in 2023.
Nexstar also has non-contributory unfunded supplemental executive retirement and ERISA excess plans which supplement the coverage of the defined benefit retirement plans to certain employees and former employees. During 2023, Nexstar contributed $4 million to these plans. As of December 31, 2023, the total liability was $40 million. Nexstar also has various retiree medical savings account plans which reimburse eligible retired employees for certain medical expenses and unfunded plans that provide certain health and life insurance benefits to certain retired employees. Although Nexstar has frozen participation and benefits under all plans, two significant elements in determining the pension expense or credit are the expected return on plan assets and the discount rate used in projecting obligations. Large declines in the stock market and lower discount rates increase the expense and may necessitate higher cash contributions to the qualified retirement plans.
Adverse results from litigation or governmental investigations involving us can impact our business practices and operating results.
We are party to various litigation and regulatory, environmental and other proceedings with governmental authorities and administrative agencies. Adverse outcomes in lawsuits or investigations may result in significant monetary damages or injunctive relief that may adversely affect our operating results or financial condition as well as our ability to conduct our businesses as they are presently being conducted.
Any decrease in our dividend payments or suspension of our dividend payments or stock repurchases could cause our stock price to decline.
Our common stockholders are only entitled to receive the dividends declared by our board of directors. Our board of directors declared in 2023 a total cash dividend of $5.40 per share (in equal quarterly installments of $1.35 per share) to the outstanding shares of our common stock. In January 2024, our board of directors approved a 25% increase in the quarterly cash dividend to $1.69 per share beginning with the dividend declared in the first quarter of 2024. We expect to continue to pay quarterly cash dividends at the rate set forth in our current dividend policy. However, future cash dividends, if any, will be at the discretion of our board of directors and can be changed or discontinued at any time. Dividend determinations (including the amount of the cash dividend, the record date and date of payment) will depend upon, among other things, our future operations and earnings, targeted future acquisitions, capital requirements and surplus, general financial condition, contractual restrictions and other factors as our board of directors may deem relevant. In addition, the Company’s senior secured credit facilities and the indentures governing our existing notes limit our ability to pay dividends. Given these considerations, our board of directors may increase or decrease the amount of the dividend at any time and may also decide to suspend or discontinue the payment of cash dividends in the future.
We engage in share repurchases of our common stock from time to time in accordance with authorizations from our board of directors. Our repurchase program does not have an expiration date and does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares. Further, our share repurchases could affect our share trading prices or increase their volatility and may be suspended or terminated at any time, which may result in a decrease in the trading prices of our common stock.
We may not be able to adequately protect the intellectual property and other proprietary rights that are material to our business, or to defend successfully against intellectual property infringement claims by third parties.
Our business relies on a combination of patented and patent-pending technology, trademarks, trade names, copyrights, and other proprietary rights, as well as contractual arrangements, including licenses, to establish and protect its technology, intellectual property and brand names. We believe our proprietary technology, trademarks and other intellectual property rights are important to our continued success and our competitive position. Any impairment of any such intellectual property or brands could adversely impact the results of our operations or financial condition.
We seek to limit the threat of content piracy; however, policing unauthorized use of our broadcasts, products and services and related intellectual property is often difficult and the steps taken by us may not in every case prevent infringement by unauthorized third parties. Developments in technology increase the threat of content piracy by making it easier to duplicate and widely distribute pirated material. Our use of contractual provisions, confidentiality procedures and agreements, and trademark, copyright, unfair competition, trade secret and other laws to protect our intellectual property rights and proprietary technology may not be adequate. Litigation may be necessary to enforce our intellectual property rights and protect our proprietary technology, or to defend against claims by third parties that the conduct of our businesses or our use of intellectual property infringes upon such third party’s intellectual property rights. Protection of our intellectual property rights is dependent on the scope and duration of our rights as defined by applicable laws in the U.S. and abroad and the manner in which those laws are construed. If those laws are drafted or interpreted in ways that limit the extent or duration of our rights, or if existing laws are changed, our ability to generate revenue from intellectual property may decrease, or the cost of obtaining and maintaining rights may increase. There can be no assurance that our efforts to enforce our rights and protect our products, services and intellectual property will be successful in preventing content piracy.
Furthermore, any intellectual property litigation or claims brought against us, whether or not meritorious, could result in substantial costs and diversion of our resources, and there can be no assurances that favorable final outcomes will be obtained in all cases. The terms of any settlement or judgment may require us to pay substantial amounts to the other party or cease exercising our rights in such intellectual property. In addition, we may have to seek a license to continue practices found to be in violation of a third party’s rights, which may not be available on reasonable terms, or at all. Our business, financial condition or results of operations may be adversely affected as a result.
Cybersecurity risks could adversely affect the Company’s operating effectiveness and operating results.
The Company uses computers in substantially all aspects of its business operations. Its revenues are increasingly dependent on digital products. Such use exposes the Company to potential cyber incidents resulting from deliberate attacks or unintentional events. While we have not experienced cybersecurity incidents that materially impacted our operating results and financial condition, it is not uncommon for a company such as ours to be subjected to continuous attempted cyber-attacks or other malicious efforts to cause a cyber incident. These incidents can include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data or causing operational disruption. The changes in our work environment as a result of health-related events and the subsequent transition to increased remote work could also impact the security of our systems, as well as our ability to protect against attacks and detect and respond to them quickly. The adoption of some third-party services designed to enable remote work also may introduce additional security risks. We may face additional cyber-attacks as threat actors use supply chain or third-party attacks as a method for penetrating our computer systems. The possible consequences of such an attack include but are not limited to loss of data, damage to the Company’s reputation, interruptions to our operations, and/or the need to pay ransom. The results of these incidents could include, but are not limited to, business interruption, disclosure of nonpublic information, decreased advertising revenues, misstated financial data, liability for stolen assets or information, increased cybersecurity protection costs, litigation and reputational damage adversely affecting customer or investor confidence.
Risks Related to Our Industry
Intense competition in the television industry and alternative forms of media could limit our growth and profitability.
As a television broadcasting company, we face a significant level of competition, both directly and indirectly. We compete for our audience against other video services in addition to all the other leisure activities in which one could choose to engage rather than watch television.
Many of our current and potential competitors have greater financial, marketing, programming and broadcasting resources than we do. The markets in which we operate are also in a constant state of change arising from, among other things, technological improvements and economic and regulatory developments. Technological innovation and the resulting proliferation of television entertainment, such as streaming video, cable television, wireless cable, satellite-to-home distribution services, home video and entertainment systems and the internet have fractionalized television viewing audiences and have subjected television broadcast networks, cable networks and television stations to increased competition and declining viewership. In recent years, demand for television advertising has been declining and demand for advertising in alternative media has been increasing, and we expect this trend to continue. We may not be able to compete effectively or adjust our business plans to meet changing market conditions. Also, refer to “Risks Related to Our Industry--Intense competition in the television industry and alternative forms of media could limit our growth and profitability.”
New or changed federal statutes, legislation and regulations or changes in the application of existing regulations could significantly impact our operations or the television broadcasting industry as a whole.
The FCC has open proceedings to determine whether to standardize TV stations’ reporting of programming responsive to local needs and interests; whether to modify its network non-duplication and syndicated exclusivity rules; whether to modify its standards for “good faith” retransmission consent negotiations; whether to broaden the definition of “MVPD” to include online video programming distributors; and the appropriate substance and scope of its indecency enforcement policy; and the FCC has initiated a review of the broadcast ownership rules. In addition, changes in FCC and DOJ/FTC rules around owning or providing services to multiple stations in a local market, or other rules, could adversely impact us. The FCC also may decide to initiate other new rule-making proceedings on its own or in response to requests from outside parties, any of which might impact our business or operations. The U.S. Congress may also act to amend the Communications Act in a manner that could impact our stations and the stations we provide services to or the television broadcast industry in general. For more information about the regulations that we are subject to see-“Federal Regulation.”
We are subject to foreign ownership limitations which limit foreign investments in us.
The Communications Act limits the extent of non-U.S. ownership of companies that own U.S. broadcast stations. Under these restrictions, the holder of a U.S. broadcast license may have no more than 20% non-U.S. ownership (by vote and by equity). The Communications Act prohibits more than 25% indirect foreign ownership or control of a licensee through a parent company if the FCC determines the public interest will be served by enforcement of such restriction. The FCC has interpreted this provision to require an affirmative public interest showing before indirect foreign ownership of a broadcast licensee may exceed 25%. Therefore, certain investors may be prevented from investing in us if our foreign ownership is at or near the FCC limits.
Risks Related to Tribune Publishing’s Spin-Off
If the Tribune Publishing Company (“Tribune Publishing”) spin-off does not qualify as a tax-free distribution under Section 355 of the Code, including as a result of subsequent acquisitions of stock of Tribune or Tribune Publishing, then Tribune may be required to pay substantial U.S. federal income taxes.
On August 4, 2014, Tribune completed a separation transaction, resulting in the spin-off of the assets (other than owned real estate and certain other assets) and certain liabilities of the businesses primarily related to Tribune’s then principal publishing operations through a tax-free, pro rata dividend to its stockholders and warrant holders of 98.5% of the shares of common stock of Tribune Publishing. At that time, Tribune retained 1.5% of the outstanding common stock of Tribune Publishing. The publishing operations consisted of newspaper publishing and local news and information gathering functions that operated daily newspapers and related websites, as well as a number of ancillary businesses that leveraged certain of the assets of those businesses. As a result of the completion of the spin-off, Tribune Publishing operates the publishing business as an independent, publicly-traded company. On January 31, 2017, Tribune sold its remaining Tribune Publishing shares.
In connection with the Tribune Publishing spin-off, Tribune received a private letter ruling (the “IRS Ruling”) from the IRS to the effect that the distribution and certain related transactions qualified as tax-free to Tribune, its then stockholders and warrant holders and Tribune Publishing for U.S. federal income tax purposes. Although a private letter ruling from the IRS generally is binding on the IRS, the IRS Ruling did not rule that the distribution satisfies every requirement for a tax-free distribution, and the parties have relied on the opinion of special tax counsel, Debevoise & Plimpton LLP, to the effect that the distribution and certain related transactions qualified as tax-free to Tribune and its then stockholders and warrant holders. The opinion of the special tax counsel relied on the IRS Ruling as to matters covered by it.
The IRS Ruling and the opinion of the special tax counsel were based on, among other things, certain representations and assumptions as to factual matters made by Tribune and certain of its then stockholders. The failure of any factual representation or assumption to be true, correct and complete in all material respects could adversely affect the validity of the IRS Ruling or the opinion of the special tax counsel. An opinion of counsel represents counsel’s best legal judgment and is not binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion. In addition, the IRS Ruling and the opinion of the special tax counsel were based on the current law then in effect, and cannot be relied upon if current law changes with retroactive effect. If the Tribune Publishing spin-off is ultimately determined not to be tax-free, we could be liable for the U.S. federal and state income taxes imposed as a result of the transaction. Furthermore, events subsequent to the distribution could cause us to recognize a taxable gain in connection therewith. Although Tribune Publishing is required to indemnify us against taxes on the distribution that arise after the distribution as a result of actions or failures to act by Tribune Publishing or any member thereof, Tribune Publishing’s failure to meet such obligations and our administrative and legal costs in enforcing such obligations may have a material adverse effect on our financial condition.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments
None.

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ITEM 2. PROPERTIES
Item 2. Properties
We have office space for our corporate headquarters in Irving, TX, which is leased through 2033. Each of our markets has facilities consisting of offices, studios, sales offices and tower and transmitter sites. We own approximately 53% of our office and studio locations and approximately 55% of our tower and transmitter locations. The remaining properties that we utilize in our operations are leased. We consider all of our properties, together with equipment contained therein, to be adequate for our present needs. We continually evaluate our future needs and from time to time will undertake significant projects to replace or upgrade facilities.
While none of our owned or leased properties is individually material to our operations, if we were required to relocate any towers, the cost could be significant. This is because the number of sites in any geographic area that permit a tower of reasonable height to provide good coverage of the market is limited, and zoning and other land use restrictions, as well as Federal Aviation Administration and FCC regulations, limit the number of alternative locations or increase the cost of acquiring them for tower sites. See Item 1, “Business-The Stations” for a complete list of stations by market.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings
The information set forth under Note 16 to our Consolidated Financial Statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K is incorporated herein by reference. For additional discussion of certain risks associated with legal proceedings, see “Risk Factors” above.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures
None.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Prices; Record Holders and Dividends
Our common stock trades on The NASDAQ Global Select Market (“NASDAQ”) under the symbol “NXST.”
As of February 27, 2024, there were approximately 180,000 shareholders of record of our common stock, including shares held in nominee names by brokers and other institutions.
Pursuant to our current dividend policy, our board of directors declared in 2023, 2022 and 2021 total annual cash dividends of $5.40 per share, $3.60 per share and $2.80 per share, respectively, with respect to outstanding shares of our common stock. The dividends were paid in equal quarterly installments.
On January 26, 2024, our board of directors approved a 25% increase in the quarterly cash dividend to $1.69 per share of outstanding common stock beginning with the first quarter of 2024. Dividend determinations will depend upon, among other things, our future operations and earnings, targeted future acquisitions, capital requirements and surplus, general financial condition, contractual restrictions and other factors as our board of directors may deem relevant. Additionally, the Company’s senior secured credit facilities and the indentures governing Nexstar’s existing notes limit our ability to pay dividends. Given these considerations, our board of directors may increase or decrease the amount of dividends at any time and may also decide to suspend or discontinue the payment of cash dividends in the future.
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
The following is a summary of Nexstar’s repurchases of its common stock by month during the fourth quarter of 2023 (in millions, except for share and per share information):
Total Number of Shares
Approximate Dollar Value
Purchased as Part of
of Shares That May Yet Be
Total Number
Average Price
Publicly Announced
Purchased Under the
of Shares Purchased
Paid per Share
Plans or Programs
Plans or Programs
October 4 ̶ 25, 2023
267,321
$
140.27
267,321
$
November 15 ̶ 30, 2023
132,390
$
148.18
132,390
December 1 ̶ 29, 2023
229,758
$
149.01
229,758
629,469
$
145.13
629,469
On July 27, 2022, our board of directors approved a new share repurchase program authorizing the Company to repurchase up to an additional $1.5 billion of its common stock, of which $1.258 billion remained available as of December 31, 2022. During the year ended December 31, 2023, Nexstar repurchased a total of 3,782,104 shares of its common stock for $605 million, funded by cash on hand, which were accounted for as treasury stock. As of December 31, 2023, the remaining available amount under the share repurchase authorization was $652 million.
Share repurchases are executed from time to time in open market transactions, block trades or in private transactions, including through Rule 10b5-1 plans. There is no minimum number of shares that Nexstar is required to repurchase. The repurchase program does not have an expiration date and may be suspended or discontinued at any time without prior notice.
Securities Authorized for Issuance Under Equity Compensation Plans as of December 31, 2023
Number of securities
Number of securities
to be issued upon
Weighted average
remaining available
exercise of outstanding
exercise price of
for future issuance
options and vesting of
outstanding
excluding securities
Plan Category
restricted stock units
options
reflected in column (a)
(a)
(b)
(c)
Equity compensation plans approved by security holders(1)
1,232,959
$
47.17
1,562,447
Equity compensation plans not approved by security holders
-
-
-
1,232,959
$
47.17
1,562,447
(1)The 1,232,959 securities to be issued consist of 244,068 outstanding stock options, with a weighted average exercise price of $47.17 and 988,891 time-based and performance-based restricted stock units.
For a more detailed description of our equity plans and grants, we refer you to Note 13 to the Consolidated Financial Statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K.
Comparative Stock Performance Graph
The following graph compares the total return of our common stock based on closing prices for the period from December 31, 2018 through December 31, 2023 with the total return of the NASDAQ Composite Index and our peer index of comparable television companies. Our peer group index consists of the following publicly traded companies: Gray Television, Inc., Tegna, Inc., Sinclair, Inc. (“Sinclair”), The E.W. Scripps Company, Fox Corporation and Paramount Global. The graph assumes the investment of $100 in our common stock and in both of the indices on December 31, 2018, with the reinvestment of dividends into shares of our common stock or the indices, as applicable. The performance shown is not necessarily indicative of future performance.
12/31/2018
12/31/2019
12/31/2020
12/31/2021
12/31/2022
12/31/2023
Nexstar Media Group, Inc. (NXST)
$
100.00
$
151.87
$
145.00
$
204.37
$
241.77
$
223.71
NASDAQ Composite Index
$
100.00
$
136.69
$
198.10
$
242.03
$
163.28
$
236.17
Peer Group
$
100.00
$
109.58
$
96.01
$
97.64
$
72.12
$
65.21

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. Reserved

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and related Notes included in Part IV, Item 15(a) of this Annual Report on Form 10-K.
As a result of our deemed controlling financial interests in the consolidated VIEs in accordance with U.S. GAAP, we consolidate the financial position, results of operations and cash flows of these VIEs as if they were wholly-owned entities. We believe this presentation is meaningful for understanding our financial performance. Refer to Note 2 to our Consolidated Financial Statements for a discussion of our determinations of VIE consolidation under the related authoritative guidance. The following discussion of our financial position and results of operations includes the consolidated VIEs’ financial position and results of operations.
Executive Summary
2023 Highlights
•Net revenue was $4.9 billion for the year ended December 31, 2023.
•Returned approximately $796 million of capital to shareholders through repurchases of common stock of $605 million and dividends of $191 million, funded by cash on hand.
•Reduced our debt by $125 million, funded by cash on hand.
•Reached multi-year distribution agreements for all agreements up for renewal in 2023.
•Renewed and extended multi-year affiliation agreements with Fox Network and MyNetwork.
•Launched The CW affiliations for three of its stations in the top 15 television markets, including WPHL-TV in Philadelphia (DMA #4), KRON-TV in San Francisco (DMA #10), and WTTA-TV in Tampa (DMA #12).
•Acquired several exclusive sports programming licenses at the CW including exhibition rights to the WWE NXT beginning in October 2024 through September 2029, broadcast rights to the NASCAR Xfinity Series beginning in 2025 through the 2031 racing season and broadcast rights to 50 Atlantic Coast Conference (ACC) college football and basketball games beginning in 2023 through the 2027 season.
•Expanded and extended CW network affiliation agreements with Hearst Television, Sinclair, Inc., and Gray Television, Inc.
•Expanded news programming at NewsNation, America’s fastest growing cable news network in primetime, to 24 hours per weekday of national news, analysis, and talk.
•Created a new advertising sales structure and to implement Nexstar’s new data and technology-driven, multi-platform strategy and accelerate the monetization of the Company’s platforms.
•Acquired certain assets of WSNN-LD, an MNTV-affiliated low power television station serving the Tampa, Florida market and KUSI-TV, an independent full power television station serving the San Diego, CA market, for a combined total purchase price of $38 million in cash.
•Filed the certificate of its amended and restated certificate of incorporation to reflect the amendments to its certificate of incorporation approved by its shareholders at the 2023 annual meeting, to, among other things, declassify its Board of Directors beginning at the 2024 annual meeting.
Overview of Operations
As of January 2024, we owned, operated, programmed or provided sales and other services to 201 full power television stations and one AM radio station, including those owned by VIEs, in 117 markets in 40 states and the District of Columbia. The stations are affiliates of ABC, NBC, FOX, CBS, The CW, MNTV and other broadcast television networks.
Through various local service agreements, we provided sales, programming and other services to 37 full power television stations owned by independent third parties, of which 35 full power television stations are VIEs that are consolidated into our financial statements. See Note 2 to our Consolidated Financial Statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K for a discussion of the local service agreements we have with these independent third parties. We do not own the consolidated VIEs or their television stations. However, we are deemed under U.S. GAAP to have controlling financial interests for financial reporting purposes in these entities because of (i) the local service agreements we have with their stations, (ii) our (excluding The CW) guarantee of the obligations incurred under Mission’s senior secured credit facility, (iii) our power over significant activities affecting the VIEs’ economic performance, including budgeting for advertising revenue, advertising sales and, in some cases, hiring and firing of sales force personnel and (iv) purchase options granted by each consolidated VIE which permit us to acquire the assets and assume the liabilities of each of these VIEs’ stations, subject to FCC consent. In compliance with FCC regulations for all the parties, each of the consolidated VIEs maintains complete responsibility for and control over programming, finances and personnel for its stations.
We also own a 75.0% ownership interest in The CW, the fifth major broadcast network in the U.S., NewsNation, a national cable news network, two digital multicast networks, Antenna TV and Rewind TV, multicast network services provided to third parties, and a 31.3% ownership stake in TV Food Network. Our digital assets include 140 local websites, 278 mobile applications, 25 connected television applications, and six FAST channels representing products of our local television stations, The CW, NewsNation, The Hill, and BestReviews and a suite of advertising solutions.
The largest portion of operating revenue of our Company is derived from distribution revenue, which relates to retransmission of Company stations’ signals and the carriage of our cable and broadcast networks by cable, satellite and other MVPDs and OVDs and, in the case of The CW, its local affiliates. For the year ended December 31, 2023, the Company’s distribution revenue represented 55.3% of total net revenue. Distributors generally pay for retransmission rights of local stations and for carriage of our networks on a per subscriber basis. Distribution revenue is affected positively or negatively by the rate of growth or decline of subscribers and the growth in the per subscriber fee due to contract renegotiations or annual escalators in existing contracts. Nexstar anticipates that retransmission fees will continue to increase until there is a more balanced relationship between viewers delivered and fees paid for delivery of such viewers. We also generate distribution revenues from the affiliation fees that CW’s third-party local station affiliates pay to the network and from programmers who lease the use of our spectrum in selected local markets to air their content on our multicast streams.
We also generate revenue from core television advertising and digital advertising. For the year ended December 31, 2023, the Company generated 33.7% of its net revenue from core advertising and 8.0% from digital advertising. Advertisers typically pay for advertising on our television and digital assets based on the number of impressions our programming or digital content delivers. As a result, our core television and digital advertising is affected by a number of factors, including the size and demographics of the audience viewing our programming and digital content, economic conditions, demand for advertising and our sales effort. Digital advertising that is not directly sold to advertisers through our in-house and third party sales teams, is sold via programmatic exchanges. In addition, we generate digital advertising revenue from the sale of advertising on third party sites and other local and national services.
In even years, we generate a substantial amount of revenue from political advertising. For the years ended December 31, 2023 and 2022, the Company generated 1.3% and 9.7%, respectively, of our net revenue from political advertising. Political advertising is affected by the number of competitive races there are and the extent to which the Company’s stations are located in the relevant competitive markets, the amount of funds raised by candidates, PACs and others, the availability and pricing of television advertising inventory and the availability of alternative media. Because of the scale of Nexstar, we typically have a presence in the substantial majority of markets with competitive political races. All national revenue is derived from advertisements placed through advertising agencies.
Our primary operating expenses include programming, newsgathering, production and promotion, employee salaries and benefits, sales commissions, digital cost of goods sold and content creation costs, and other administrative and corporate expenses. Programming costs are primarily related to fees paid to networks with which ours and our partners’ stations are affiliated and license fees for original and sports programming, in the case of The CW, and syndicated programming in the case of the stations and our networks. A large percentage of the costs involved in our operations is relatively fixed.
Regulatory Developments
As a television broadcaster, the Company is highly regulated, and its operations require that it retain or renew a variety of government approvals and comply with changing federal regulations. On April 1, 2021, the U.S. Supreme Court issued a decision that reversed a lower court of appeals ruling and upheld the FCC’s elimination or modification of certain of its media ownership rules in the agency’s 2010/2014 quadrennial review of those rules. Among the regulations eliminated in 2021 as a result of the Supreme Court ruling was a rule providing that a television station licensee which sells more than 15 percent of the weekly advertising inventory of another television station in the same market under a JSA is deemed to have an attributable ownership interest in that station, as well as a requirement that at least eight independently owned television stations remain in a local television market for a party to acquire a second station in that market. While these restrictions are no longer in effect, the FCC’s 2022 quadrennial media ownership review and an FCC proceeding to review the current national limit on television ownership are currently pending. The FCC could reinstitute its earlier restrictions or impose other limitations in these or any future reviews.
Seasonality
Advertising revenue is positively affected by a strong economy. Conversely, declines in advertising budgets of advertisers, particularly in recessionary periods, adversely affect the broadcast industry and, as a result, may contribute to a decrease in our advertising revenue. In even-numbered years we generate substantial advertising revenue from the political advertising we sell to candidates, political action committees and political parties. Advertising revenue is also positively affected by certain events such as the Olympic Games or the Super Bowl. Advertising revenue is generally highest in the second and fourth quarters of each year, due in part to increases in consumer advertising in the spring and retail advertising in the period leading up to, and including, the holiday season.
Historical Performance
Revenue
The following table sets forth the amounts of the Company’s principal types of revenue (dollars in millions) and each type of revenue as a percentage of total net revenue for the years ended December 31:
Amount
%
Amount
%
Amount
%
Core advertising
$
1,660
33.7
$
1,718
33.0
$
1,762
37.9
Political advertising
1.3
9.7
1.0
Distribution
2,727
55.3
2,571
49.3
2,473
53.2
Digital
8.0
7.0
6.9
Other
1.7
1.0
1.0
Total net revenue
$
4,933
100.0
$
5,211
100.0
$
4,648
100.0
Results of Operations
The following table sets forth a summary of the Company’s operations for the years ended December 31 (dollars in millions), and each component of operating expense as a percentage of net revenue:
Amount
%
Amount
%
Amount
%
Net revenue
$
4,933
100.0
$
5,211
100.0
$
4,648
100.0
Operating expenses (income):
Direct operating
2,153
43.6
2,005
38.5
1,862
40.0
Selling, general and administrative, excluding corporate
18.3
17.3
18.2
Corporate
3.9
3.8
3.8
Depreciation and amortization
19.1
12.7
12.7
Goodwill and other long-lived asset impairments
0.7
2.6
0.5
Reimbursement from the FCC related to station repack
-
-
(3
)
(0.1
)
(20
)
(0.4
)
Other
-
-
-
-
(5
)
(0.1
)
Total operating expenses
4,225
3,899
3,473
Income from operations
$
$
1,312
$
1,175
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
The period-to-period comparability of our consolidated operating results is affected by acquisitions. For each quarter we present, our legacy business units include those business units that we owned or consolidated into our financial statements for the complete quarter in the current and prior years. For our annual and year to date presentations, we combine the legacy business unit amounts presented in each quarter.
Revenue
Core advertising revenue was $1.66 billion for the year ended December 31, 2023 compared to $1.72 billion for the same period in 2022, a decrease of $58 million, or 3.4%. Excluding the $63 million of incremental core advertising revenue from our acquisition of The CW (acquired on September 30, 2022), core advertising revenue decreased by 7.0% primarily due to a weaker advertising market and the absence of first quarter advertising revenue from the Olympics on our NBC affiliate stations, partially offset by an increase in advertising revenue during the first quarter from the Super Bowl aired on FOX, where we have more FOX-affiliated stations versus NBC-affiliated stations in the prior year.
Political advertising revenue was $66 million for the year ended December 31, 2023 compared to $506 million for the same period in 2022, a decrease of $440 million, as 2023 is not an election year.
Distribution revenue was $2.73 billion for the year ended December 31, 2023 compared to $2.57 billion for the same period in 2022, an increase of $156 million, or 6.1%. Excluding the $53 million of incremental distribution revenue from our acquisition of The CW and the combined effect of the temporary disruption of a large MVPD for 76 days in the third quarter of 2023 and the impact of the removal of partner stations from certain MVPDs related to continued negotiation (5.6% decrease in revenue), distribution revenue increased by 9.6% primarily due to renewals of contracts in 2022 providing for higher rates per subscriber and scheduled annual escalation of rates per subscriber, partially offset by continued MVPD subscriber attrition. We anticipate continued increase of retransmission fees until there is a more balanced relationship between viewers delivered and fees paid for delivery of such viewers. In January 2024, our partner stations have successfully renewed one of the distribution agreements and have been restored on the MVPD’s service.
Digital revenue, representing advertising revenue on our stations’ web and mobile sites and other internet-based revenue, was $395 million for the year ended December 31, 2023 compared to $365 million for the same period in 2022, an increase of $30 million, or 8.2%, primarily due to incremental revenue from our acquisition of The CW (acquired on September 30, 2022) of $32 million.
Operating Expenses
Direct operating expenses, consisting primarily of programming, news, and technical expenses, and selling, general and administrative expenses were $3.06 billion for the year ended December 31, 2023 compared to $2.91 billion for the same period in 2022, an increase of $147 million, or 5.1%. Excluding the incremental $74 million of operating expenses from our acquisition of The CW, direct operating and selling, general and administrative expenses increased by 2.6% primarily due to an increase in station programming costs from network affiliation renewals and annual increases in network affiliation costs, increased news programming at NewsNation and our local stations as well as increased digital sales and administrative expenses, partially offset by a decrease in commission incurred from national representation due to a decrease in political advertising revenue.
Corporate expenses, related to costs associated with the centralized management of our stations, were $193 million for the year ended December 31, 2023 compared to $198 million for the same period in 2022, a decrease of $5 million, or 2.5% (no significant change).
Depreciation and amortization expense was $941 million for the year ended December 31, 2023 compared to $662 million for the same period in 2022, an increase of $279 million, or 42.1%. Depreciation and amortization expense consists of the following:
•Amortization of broadcast rights was $453 million for the year ended December 31, 2023 compared to $193 million for the same period in 2022, an increase of $260 million, or 134.7%, primarily due to incremental programming expenses from our acquisition of The CW (acquired on September 30, 2022) of $286 million, partially offset by a reduction in the television stations’ broadcast rights costs of $26 million.
•Amortization of intangible assets was $311 million for the year ended December 31, 2023 compared to $309 million for the same period in 2022, an increase of $2 million, or 0.6% (no significant change).
•Depreciation of property and equipment was $176 million for the year ended December 31, 2023 compared to $160 million for the same period in 2022, an increase of $16 million, or 10.0%. The increase was primarily due to newly capitalized assets.
In 2023 and 2022, we recorded $35 million and $96 million, respectively, of goodwill and intangible assets impairment on our product review and recommendation platform reporting unit. The Company’s assessment indicated that the reporting unit’s carrying amount exceeded its fair value, and therefore an impairment loss was identified and recorded in the fourth quarter of 2023 and 2022, respectively. As of December 31, 2023, this reporting unit has no remaining goodwill balance.
In 2022 certain real estate properties located in Chicago were sold and written down to their estimated fair value, less cost to sell, resulting in the Company’s recognition of impairment charges of $37 million in the fourth quarter of 2022.
Income from equity method investments, net
Income from equity method investments, net was $104 million for the year ended December 31, 2023, compared to $153 million for the same period in 2022, a decrease of $49 million. Our largest equity method investment is TV Food Network in which we own a 31.3% interest. We record our equity in TV Food Network’s net income, less our share in the amortization of basis difference related to the investment, as income from equity method investments. In 2023, TV Food Network’s net income decreased by $159 million resulting to our share in its income to decrease by $50 million. TV Food Network’s lower net income was primarily due to a decrease in its advertising revenue driven by a weaker advertising market. There was no significant change to our share in the amortization of basis difference associated with our investment in TV Food Network. For additional information on our investment in TV Food Network, including the accounting for basis difference, refer to Note 6 to our Consolidated Financial Statements.
Interest Expense, net
Interest expense, net was $447 million for the year ended December 31, 2023 compared to $337 million for the same period in 2022, an increase of $110 million, or 32.6%, primarily due to increases in interest rates in the Company’s outstanding loans under its senior secured credit facilities, partially offset by decreases in interest expense from debt repayments and lower interest rates obtained in connection with the refinancing of certain of our term loans in June 2022. Interest rates on outstanding loans under the Company’s senior secured credit facilities ranged from 6.85% to 7.85% as of December 31, 2023, compared to interest rates ranging from 5.86% to 6.89% as of December 31, 2022. These interest rates were a mixture of Secured Overnight Financing Rate (“SOFR”) plus Credit Spread Adjustment (“CSA”) used to account for the difference between SOFR and London Interbank Offered Rate (“LIBOR”), plus applicable margin in 2023 compared to a mixture of SOFR plus CSA plus applicable margin and U.S. LIBOR plus applicable margin in 2022.
Pension and other postretirement plans credit, net
Pension and other postretirement plans credit, net was $36 million for the year ended December 31, 2023 compared to $43 million for the same period in 2022, a decrease of $7 million (no significant change).
Income Taxes
Income tax expense was $131 million for the year ended December 31, 2023 compared to an income tax expense of $274 million for the same period in 2022, a decrease of $143 million. The effective tax rates during the years ended December 31, 2023 and 2022 were 32.7% and 22.5%, respectively. Nexstar reported permanent differences, including an adjustment for losses related to the minority interest in The CW, resulting in an incremental income tax expense of $44 million or 7.2% increase to the effective tax rate. Also, changes in the valuation allowance resulted in an incremental income tax expense of $15 million, or a 2.9% increase to the effective tax rate in 2023.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
The period-to-period comparability of our consolidated operating results is affected by acquisitions. For each quarter we present, our legacy business units include those business units that we owned or consolidated into our financial statements for the complete quarter in the current and prior years. For our annual and year to date presentations, we combine the legacy business unit amounts presented in each quarter.
Revenue
Core advertising revenue was $1.72 billion for the year ended December 31, 2022 compared to $1.76 billion for the same period in 2021, a decrease of $44 million, or 2.5%, primarily due to a weaker national advertising market, the absence of third quarter advertising revenue from the Olympics on our NBC affiliate stations and changes in the mix between our core and political advertising revenues of $70 million, partially offset by incremental revenue from our acquisition of The CW of $27 million.
Political advertising revenue was $506 million for the year ended December 31, 2022 compared to $45 million for the same period in 2021, an increase of $461 million, as 2022 was a mid-term election year.
Distribution revenue was $2.57 billion for the year ended December 31, 2022 compared to $2.47 billion for the same period in 2021, an increase of $98 million, or 4.0%. The increase was primarily due to scheduled annual escalation of rates per subscriber, renewals of contracts in 2021 providing for higher rates per subscriber and incremental revenue from our acquisition of The CW of $17 million, partially offset by continued MVPD subscriber attrition, a few periods during the negotiation of new contracts with our MVPD partners where our partners’ stations were not available and a settlement of a dispute in connection with a new contract with one of our distributors. We anticipate continued increase of retransmission fees until there is a more balanced relationship between viewers delivered and fees paid for delivery of such viewers.
Digital revenue, representing advertising revenue on our stations’ web and mobile sites and other internet-based revenue, was $365 million for the year ended December 31, 2022 compared to $322 million for the same period in 2021, an increase of $43 million, or 13.0%, primarily due to growth in our television stations digital advertising and services revenue, incremental revenue from our acquisitions of The CW in September 2022 of $17 million and a digital business we acquired in the third quarter of 2021 of $22 million, offset by weakness in the national digital advertising market and ecommerce.
Operating Expenses
Direct operating expenses, consisting primarily of news, engineering and programming, and selling, general and administrative expenses were $2.91 billion for the year ended December 31, 2022 compared to $2.71 billion for the same period in 2021, an increase of $197 million, or 7.3%. This was primarily due to an increase in cost related to incremental operating expenses from our acquisitions of The CW in September 2022 of $70 million and a digital business we acquired in the third quarter of 2021 of $16 million, an increase in variable costs associated with the increase in net revenue, an increase in station programming costs due to network affiliation renewals and annual increases in network affiliation costs, and increased promotion costs, partially offset by a reversal of an accrual in connection with a settlement of a dispute in connection with a new contract with one of our distributors and some administrative savings, primarily related to healthcare.
Corporate expenses, related to costs associated with the centralized management of our stations, were $198 million for the year ended December 31, 2022 compared to $176 million for the same period in 2021, an increase of $22 million, or 12.9%, primarily due to an increase in stock-based compensation of $15 million.
Depreciation and amortization expense was $662 million for the year ended December 31, 2022 compared to $589 million for the same period in 2021, an increase of $73 million, or 12.5%. Depreciation and amortization expense consists of the following:
•Amortization of broadcast rights was $193 million for the year ended December 31, 2022 compared to $121 million for the same period in 2021, an increase of $72 million, or 59.3%. The increase was primarily due to incremental amortization from our acquisition of The CW of $90 million, partially offset by a reduction in NewsNation’s costs of $9 million as it continues to shift its focus from syndicated programming to national news programs.
•Amortization of intangible assets was $309 million for the year ended December 31, 2022 compared to $301 million for the same period in 2021, an increase of $8 million, or 2.8% (no significant change).
•Depreciation of property and equipment was $160 million for the year ended December 31, 2022 compared to $167 million for the same period in 2021, a decrease of $7 million, or 4.0% (no significant change).
In the fourth quarter of 2022, we recorded a $96 million goodwill and intangible assets impairment on our product review and recommendation platform reporting unit. The Company’s assessment indicated that the reporting unit’s carrying amount exceeded its fair value, and therefore an impairment loss was identified.
In 2022 and 2021, certain real estate properties located in Chicago were classified as held for sale. Due to designations as held for sale assets, the properties’ carrying amounts were written down to their estimated fair value, less estimated cost to sell, resulting in the Company’s recognition of impairment charges of $37 million and $23 million in the fourth quarter of 2022 and 2021, respectively.
Gain on bargain purchase
Gain on bargain purchase of $56 million for the year ended December 31, 2022 pertains to our acquisition of The CW, representing the excess of the fair value of the net assets acquired over the $0 purchase consideration and the fair value of noncontrolling interests. For additional information on this acquisition, see Note 3, “Acquisitions and Dispositions” to our Consolidated Financial Statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K.
Income from equity method investments, net
Income from equity method investments, net was $153 million for the year ended December 31, 2022, compared to $125 million for the same period in 2021, an increase of $28 million. Our largest equity method investment is TV Food Network in which we own a 31.3% interest. We record our equity in TV Food Network’s net income, less our share in the amortization of basis difference related to the investment, as income from equity method investments. In 2022, certain components of such basis difference reached the end of the estimated amortization life resulting to a decrease in our share in the amortization of $55 million (increase in income). This was partially offset by a decrease in our share in TV Food Network’s net income of $27 million. For additional information on our investment in TV Food Network, including the accounting for basis difference, refer to Note 6 to our Consolidated Financial Statements.
Interest Expense, net
Interest expense, net was $337 million for the year ended December 31, 2022 compared to $283 million for the same period in 2021, an increase of $54 million, or 19.1%, primarily due to increases in interest rates in the Company’s outstanding loans under its senior secured credit facilities, partially offset by decreases in interest expense from debt repayments and lower interest rates obtained in connection with the refinancing of certain of our term loans in June 2022. Interest rates on outstanding loans under the Company’s senior secured credit facilities ranged from 5.86% to 6.89% as of December 31, 2022, compared to interest rates ranging from 1.60% to 2.60% as of December 31, 2021. These interest rates were a mixture of SOFR plus CSA used to account for the difference between SOFR and LIBOR, plus applicable margin and U.S. LIBOR plus applicable margin in 2022 compared to U.S. LIBOR plus applicable margin only in 2021.
Pension and other postretirement plans credit, net
Pension and other postretirement plans credit, net was $43 million for the year ended December 31, 2022 compared to $81 million for the same period in 2021, a decrease of $38 million, primarily due to lower estimated expected return on plan assets of $19 million, higher estimated interest cost of $7 million and a $13 million settlement gain from the purchase of an annuity contract related to certain participants of a qualified pension plan during the fourth quarter of 2021.
Income Taxes
Income tax expense was $274 million for the year ended December 31, 2022 compared to an income tax expense of $263 million for the same period in 2021, an increase of $11 million. The effective tax rates during the years ended December 31, 2022 and 2021 were 22.5% and 24.1%, respectively. The decrease in the effective tax rate is primarily related to changes in the valuation allowance resulting in an incremental income tax benefit of $24 million, or a 2.1% decrease to the effective tax rate in 2022. The gain on bargain purchase arising from the acquisition of The CW resulted in a 1.1% decrease to the effective tax rate.
Liquidity and Capital Resources
The Company is leveraged, which makes it vulnerable to changes in general economic conditions. The Company’s ability to repay or refinance its debt will depend on, among other things, financial, business, market, competitive and other conditions, many of which are beyond the Company’s control. The Company’s primary sources of liquidity include cash on hand, borrowing capacity under its revolving credit facilities (with a maturity date of June 2027) and cash generated from operations. The Company believes these sources of liquidity are sufficient to meet its business operating requirements, its capital expenditures and to continue to service its debt for at least the next 12 months as of the filing date of this Annual Report on Form 10-K. As of December 31, 2023, the Company was in compliance with the financial covenants contained in the amended credit agreements governing its senior secured credit facilities.
Any future adverse economic conditions, including those resulting from heightened and sustained inflation and higher interest rates, could adversely affect the Company’s future operating results, cash flows and financial condition.
Cash Flow Summary
The following tables present the Company’s total operating, investing and financing activity cash flows for the three years ended December 31 (in millions):
Net cash provided by operating activities
$
$
1,403
$
1,215
Net cash provided by (used in) investing activities(1)
(173
)
(232
)
Net cash used in financing activities
(899
)
(1,515
)
(945
)
Net increase (decrease) in cash, cash equivalents and restricted cash
$
(73
)
$
$
Cash paid for interest
$
$
$
Income taxes paid, net of refunds(2)
$
$
$
(1)In 2023, 2022 and 2021, the investing activities included total capital expenditures of $149 million, $157 million and $151 million, respectively, of which none, $1 million and $10 million, respectively, were reimbursed from the FCC in connection with the station repack.
(2)In 2022, income taxes paid, net of refunds, includes $48 million in tax payments related to various sales of real estate properties.
As of December 31,
Cash, cash equivalents and restricted cash
$
$
Cash Flows-Operating Activities
Net cash provided by operating activities decreased by $404 million during the year ended December 31, 2023 compared to the same period in 2022. This was primarily due to a decrease in operating income (excluding non-cash transactions) of $417 million, an increase in payments for broadcast rights of $173 million, higher interest payments of $107 million and timing of accounts receivable collections of $42 million. These decreases were partially offset by sources of cash resulting from timing of payments to our vendors of $110 million, lower income tax payments of $201 million and an increase in distribution from our equity investment in TV Food Network of $20 million. The increase in payments for broadcast rights was due to incremental payments from our acquisition of The CW (acquired on September 30, 2022) of $211 million, partially offset by a decrease in payments for our syndicated programming of $38 million. The increase in interest payments was primarily due to higher interest rates, partially offset by decreases in interest expense from debt repayments and lower interest rates obtained in connection with the refinancing of certain of our term loans in June 2022.
Net cash provided by operating activities increased by $188 million during the year ended December 31, 2022 compared to the same period in 2021. This was primarily due to an increase in operating income (excluding non-cash transactions) of $357 million, sources of cash resulting from timing of accounts receivable collections of $108 million, and an increase in distributions from our equity investment in TV Food Network of $10 million. These increases were partially offset by an increase in payments for broadcast rights of $77 million, use of cash from timing of payments to our vendors of $107 million, higher interest payments of $57 million, higher tax payments of $50 million and other items. The increase in payments for broadcast rights was due to incremental payments from our acquisition of The CW of $119 million, partially offset by a decrease in payments for our syndicated programming of $42 million.
Cash paid for interest increased primarily due to increases in the effective interest rates in the Company’s outstanding floating rate loans under its senior secured credit facilities due to the increase in SOFR and LIBOR, partially offset by decreases in interest expense from debt repayments and lower interest rates obtained in connection with the refinancing of certain of our term loans in June 2022. The increase in tax payments was primarily due to the sale of certain real estate properties in 2022 resulting in tax payments of $48 million.
Cash Flows-Investing Activities
Net cash used in investing activities was $173 million and $232 million during the years ended December 31, 2023 and 2021, respectively. Net cash provided by investing activities during the year ended December 31, 2022 was $125 million.
In 2023, we spent a total of $149 million in capital expenditures and $38 million in the acquisitions of KUSI-TV and WSNN-LD, partially offset by a deposit received associated with a proposed sale of a real estate asset of $10 million.
In 2022, we received proceeds from the sale of certain real estate properties of $241 million, received a deposit associated with a proposed sale of real estate property of $10 million and recorded cash acquired from The CW acquisition of $29 million, partially offset by capital expenditures of $157 million.
In 2021, we spent a total of $151 million in capital expenditures and $138 million to acquire television stations, a digital business and certain license assets. These decreases were partially offset by the proceeds from the sale of stations and business units and asset disposals of $20 million, reimbursements from the FCC related to station repack of $20 million and deposits received associated with the sale of real estate assets of $13 million.
Cash Flows-Financing Activities
Net cash used in financing activities for the years ended December 31, 2023, 2022 and 2021 was $899 million, $1,515 million and $945 million, respectively.
In 2023, the Company repaid scheduled principal maturities of $125 million of our term loans, paid dividends to our common stockholders of $191 million ($1.35 per share per quarter), repurchased common shares of $605 million, paid cash for taxes in exchange for shares of common stock withheld of $24 million resulting from net share settlements of certain stock-based compensation, and paid for capitalized software of $19 million. These outflows were partially offset by a contribution from noncontrolling interests amounting to $62 million. We also borrowed $20 million under our revolving credit facilities which was repaid in full in 2023.
In 2022, we received $2,420 million of proceeds (net of capitalized lenders’ fees of $5 million) from the issuance of a Term Loan A, due June 2027 and used $2,414 million to repay our then outstanding Term Loan A, due October 2023, Term Loan A, due September 2024, Term Loan B, due January 2024 and a portion of Term Loan B, due September 2026. We prepaid a portion of the outstanding principal balance of our Term Loan B of $333 million, made scheduled principal payments on term loans of $84 million, repurchased and cancelled $71 million of our senior unsecured notes all funded by cash on hand, paid dividends to our common stockholders of $142 million ($0.90 per share per quarter), repurchased common shares of $881 million, paid for software obligations of $16 million, paid contingent consideration in connection with a past acquisition of $14 million, and paid cash for taxes in exchange for shares of common stock withheld of $13 million resulting from net share settlements of certain stock-based compensation. These decreases were partially offset by contribution from noncontrolling interests of $30 million. Mission also drew $62 million under its 2022 revolving credit facility and utilized the proceeds to repay all of its $62 million of outstanding borrowings under its then outstanding 2018 revolving loan.
In 2021, we prepaid a portion of the outstanding principal balance of our Term Loan B, due January 2024 of $280 million and made scheduled principal payments on our Term Loan A, due September 2024 of $21 million, paid dividends to our common stockholders of $118 million ($0.70 per share during each quarter), repurchased common shares of $537 million, paid cash for taxes in exchange for shares of common stock withheld of $11 million resulting from net share settlements of certain stock-based compensation, and paid finance lease and software obligations of $18 million. These outflows were partially offset by the proceeds from the exercise of stock options during the year amounting to $8 million. Mission also received $299 million (net of $2 million discount) from its new Term Loan B, due June 2028 and utilized $268 million to repay a portion of its revolving loans. We also borrowed $20 million under our revolving credit facilities which was repaid in full in 2021.
Material Cash Requirements
The Company is a party to many contractual obligations involving commitments to make payments to third parties. Certain contractual obligations are recorded on the Consolidated Balance Sheet as of December 31, 2023, while others are considered future commitments. The following summarizes the Company’s contractual obligations as of December 31, 2023, and the effect such obligations are expected to have on the Company’s short-term and long-term liquidity and capital resource needs (in millions):
Payments Due by Period
Total
2025 - 2026
2027 - 2028
Thereafter
Recorded contractual obligations:
Nexstar senior secured credit facility
$
3,804
$
$
1,803
$
1,879
$
-
Mission senior secured credit facility
-
5.625% senior unsecured notes due 2027
1,714
-
-
1,714
-
4.75% senior unsecured notes due 2028
1,000
-
-
1,000
-
Operating lease obligations
Finance lease obligations
Broadcast rights current cash commitments(1)
-
-
Other(2)(3)
-
-
Unrecorded contractual obligations:
Network affiliation agreements(4)
1,915
1,126
-
-
Cash interest on debt(5)
1,665
-
Executive employee contracts(6)
-
Broadcast rights future cash commitments(7)
1,110
Other
-
$
12,446
$
1,864
$
4,492
$
5,563
$
(1)Future minimum payments for license agreements for which the license period has begun and liabilities have been recorded.
(2)As of December 31, 2023, we had $30 million of unrecognized tax benefits, inclusive of interest and certain deduction benefits. This liability represents an estimate of tax positions that the Company has taken in its tax returns, which may ultimately not be sustained upon examination by the tax authorities. The resolution of these tax positions may not require cash settlement due to the existence of federal and state NOLs. As such, our contractual obligations table above excludes this liability.
(3)As of December 31, 2023, we had $212 million and $21 million of funding obligations with respect to our pension benefit plans and other postretirement benefit plans, respectively, which are not included in the table above. See Note 10 to our Consolidated Financial Statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K for further information regarding our funding obligations for these benefit plans.
(4)Future minimum payments for network affiliation agreements during the contract period. Excludes network affiliation agreements between the Company’s stations and The CW as the related fees are eliminated in consolidation.
(5)Estimated interest payments due as if all debt outstanding as of December 31, 2023 remained outstanding until maturity, based on interest rates in effect at December 31, 2023.
(6)Includes the employment contracts for all corporate executive employees and general managers of our stations and entities. We expect our contracts will be renewed or replaced with similar agreements upon their expiration. Amounts included in the table above assume that contracts are not terminated prior to their expiration.
(7)Future minimum payments for license agreements for which the license period has not commenced and no liability has been recorded.
In January 2024, we entered into a multi-year time brokerage agreement with KAZT, L.L.C., the owner of television station KAZT-TV in Phoenix, Arizona, and acquired the station’s non-license assets.
From January 1 to February 27, 2024, we repurchased 190,297 shares of our common stock for $32 million, funded by cash on hand. As of the date of filing this Annual Report on Form 10-K, the remaining available amount under the share repurchase authorization was $620 million.
On January 26, 2024, our board of directors approved a 25% increase in the quarterly cash dividend to $1.69 per share of our common stock beginning with the dividend declared for the first quarter of 2024. The dividend was paid on February 23, 2024 to stockholders of record on February 9, 2024.
In February 2024, we received $40 million in cash in connection with Broadcast Music Inc.’s sale to New Mountain Capital.
Long-term debt
As of December 31, 2023, the Company had total outstanding debt of $6.8 billion, net of unamortized financing costs, discounts and premium, which represented 74.8% of the Company’s combined capitalization. The Company’s high level of debt requires that a substantial portion of cash flow be dedicated to pay principal and interest on debt, which reduces the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes.
As of December 31,
(dollars in millions)
Nexstar senior secured credit facility
$
3,804
$
3,925
Mission senior secured credit facility
5.625% Notes, due July 2027
1,714
1,714
4.75% Notes, due November 2028
1,000
1,000
Total outstanding principal
6,872
6,997
Less: Unamortized financing costs, discounts and premium, net
(35
)
(46
)
Total outstanding debt
$
6,837
$
6,951
Unused revolving loan commitments under senior secured credit facilities (1)
$
$
(1)Based on the covenant calculations as of December 31, 2023, all of the $530 million (net of outstanding standby letters of credit of $20 million) and $14 million unused revolving loan commitments under the respective Nexstar and Mission senior secured credit facilities were available for borrowing.
We (excluding The CW) guarantee full payment of all obligations incurred under Mission’s senior secured credit facility in the event of its default. Mission is a guarantor of our senior secured credit facility, our 5.625% Notes, due July 2027 and our 4.75% Notes, due November 2028. In consideration of our guarantee of Mission’s senior secured credit facility, Mission has granted us purchase options to acquire the assets and assume the liabilities of each Mission station, subject to FCC consent. These option agreements (which expire on various dates between 2024 and 2033) are freely exercisable or assignable by us without consent or approval by Mission or its shareholders. We expect these option agreements to be renewed upon expiration.
We make semiannual interest payments on the 5.625% Notes, due July 2027 on January 15 and July 15 of each year. We make semiannual interest payments on our 4.75% Notes, due November 2028 on May 1 and November 1 of each year. Interest payments on our and Mission’s senior secured credit facilities are generally paid every one to three months and are payable based on the type of interest rate selected.
The terms of our and Mission’s senior secured credit facilities, as well as the indentures governing our 5.625% Notes, due July 2027 and 4.75% Notes, due November 2028, limit, but do not prohibit us or Mission from incurring substantial amounts of additional debt in the future. Our senior secured credit facilities and the indentures governing our existing notes may limit the amount of dividends we may pay to stockholders and share repurchases we may make over the term of the agreement.
The Company does not have any rating downgrade triggers that would accelerate the maturity dates of its debt. However, a downgrade in the Company’s credit rating could adversely affect its ability to renew the existing credit facilities, obtain access to new credit facilities or otherwise issue debt in the future and could increase the cost of such debt.
The Company’s ability to access funds under its senior secured credit facilities depends, in part, on its compliance with certain financial covenants. Any additional drawings under the senior secured credit facilities will reduce the Company’s future borrowing capacity and the amount of total unused revolving loan commitments. Any future adverse economic conditions, including those resulting from heightened and sustained inflation and higher interest rates, could adversely affect our future operating results and cash flows and may cause us to seek alternative sources of funding, including accessing capital markets, subject to market conditions. Such alternative sources of funding may not be available on commercially reasonable terms or at all.
Our credit agreement contains a covenant which requires us to comply with a maximum consolidated first lien net leverage ratio of 4.25 to 1.00. The financial covenant, which is formally calculated on a quarterly basis, is based on the Company’s combined results. The Mission amended credit agreement does not contain financial covenant ratio requirements but does provide for default in the event we do not comply with all covenants contained in our credit agreement. As of December 31, 2023, we were in compliance with our financial covenants. We believe the Company will be able to maintain compliance with all covenants contained in the credit agreements governing its senior secured facilities and the indentures governing Nexstar’s 5.625% Notes, due July 2027 and Nexstar’s 4.75% Notes, due November 2028 for a period of at least the next 12 months as of the filing date of this Annual Report on Form 10-K.
Off-Balance Sheet Arrangements
As of December 31, 2023, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or VIEs, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. All of our arrangements with our VIEs in which we are the primary beneficiary are on-balance sheet arrangements. Our variable interests in other entities are obtained through local service agreements, which have valid business purposes and transfer certain station activities from the station owners to us. We are, therefore, not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.
As of December 31, 2023, we have outstanding standby letters of credit with various financial institutions amounting to $20 million. The outstanding balance of standby letters of credit is deducted against our unused revolving loan commitment under our senior secured credit facility and would not be available for withdrawal.
Issuer and Guarantor Summarized Financial Information
Nexstar Media Inc. (the “Issuer”) is the issuer of 5.625% Notes, due July 2027 and 4.75% Notes, due November 2028. These notes are fully and unconditionally guaranteed, jointly and severally, by Nexstar Media Group, Inc. (“Parent”), Mission (a consolidated VIE) and the Subsidiary Guarantors (as defined below). The Issuer, Subsidiary Guarantors, Parent and Mission are collectively referred to as the “Obligor Group” for the 5.625% Notes, due July 2027 and 4.75% Notes, due November 2028. “Subsidiary Guarantors” refers to certain of the Issuer’s restricted subsidiaries (excluding The CW) that guarantee these notes. The guarantees of the notes are subject to release in limited circumstances upon the occurrence of certain customary conditions set forth in the indentures governing the 5.625% Notes, due July 2027 and the 4.75% Notes, due November 2028. The 5.625% Notes, due July 2027 and 4.75% Notes, due November 2028 are not registered with the SEC.
The following combined summarized financial information is presented for the Obligor Group after elimination of intercompany transactions between Parent, Issuer, Subsidiary Guarantors and Mission in the Obligor Group and amounts related to investments in any subsidiary that is a non-guarantor. This information is not intended to present the financial position or results of operations of the consolidated group of companies in accordance with U.S. GAAP.
Summarized Balance Sheet Information for the Obligor Group as of December 31 (in millions):
December 31, 2023
December 31, 2022
Current assets - external(1)
$
1,246
$
1,358
Current assets - due from consolidated entities outside of Obligor Group
Total current assets
$
1,253
$
1,397
Noncurrent assets - external(1)(2)
9,429
9,748
Noncurrent assets - due from consolidated entities outside of Obligor Group
Total noncurrent assets
$
9,504
$
9,822
Total current liabilities(1)
$
$
Total noncurrent liabilities(1)
$
8,775
$
8,994
Noncontrolling interests
$
-
$
-
(1)Excludes the assets and liabilities of The CW as it is not a guarantor of the 4.75% Notes, due November 2028 and 5.625% Notes, due July 2027. On September 30, 2022, Nexstar acquired a 75.0% ownership interest in The CW (see Note 3, “Acquisitions” to our Consolidated Financial Statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K for additional information).
(2)Excludes Issuer’s equity investments of $958 million and $1,119 million as of December 31, 2023 and 2022, respectively, in unconsolidated investees. These unconsolidated investees do not guarantee the 4.75% Notes, due November 2028 and 5.625% Notes, due July 2027. For additional information on equity investments, refer to Note 6 to our Consolidated Financial Statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K for additional information.
Summarized Statements of Operations Information for the Obligor Group (in millions):
Year Ended
December 31, 2023
Net revenue - external
$
4,694
Net revenue - from consolidated entities outside of Obligor Group
Total net revenue
4,713
Costs and expenses - external
3,683
Costs and expenses - to consolidated entities outside of Obligor Group
Total costs and expenses
3,720
Income from operations
$
Net income
$
Net income attributable to Obligor Group
$
Income from equity method investments, net
$
Critical Accounting Estimates
Our Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and related disclosures. On an ongoing basis, we base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from those estimates, and any such differences could be material to our Consolidated Financial Statements.
For a summary of our significant accounting policies, we refer you to Note 2 to our Consolidated Financial Statements in Part IV, Item 15(a) of this Annual Report on Form 10-K.
We believe the following critical accounting estimates are those that are the most important to the presentation of our Consolidated Financial Statements, affect our more significant estimates and assumptions, and require the most subjective or complex judgments by management.
Consolidation of Variable Interest Entities
We regularly evaluate our local service agreements and other arrangements where we may have variable interests to determine whether we are the primary beneficiary of a VIE. Under U.S. GAAP, a company must consolidate an entity when it has a “controlling financial interest” resulting from ownership of a majority of the entity’s voting rights. Accounting rules expanded the definition of controlling financial interest to include factors other than equity ownership and voting rights.
In applying accounting and disclosure requirements, we must base our decision to consolidate an entity on quantitative and qualitative factors that indicate whether or not we have the power to direct the activities of the entity that most significantly affect its economic performance and whether or not we have the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. Our evaluation of the “power” and “economics” model must be an ongoing process and may alter as facts and circumstances change.
Mission and the other consolidated VIEs are included in our Consolidated Financial Statements because we are deemed to have controlling financial interests in these entities as VIEs for financial reporting purposes as a result of (i) local service agreements we have with the stations they own, (ii) Nexstar’s (excluding The CW) guarantee of the obligations incurred under Mission’s senior secured credit facility, (iii) our power over significant activities affecting these entities’ economic performance, including budgeting for advertising revenue, advertising sales and, in some cases, hiring and firing of sales force personnel and (iv) purchase options granted by each consolidated VIE which permit Nexstar to acquire the assets and assume the liabilities of all of these VIEs’ stations at any time, subject to FCC consent. These purchase options are freely exercisable or assignable by Nexstar without consent or approval by the VIEs. These option agreements expire on various dates between 2024 and 2033. We expect to renew these option agreements upon expiration. Therefore, these VIEs are consolidated into these financial statements.
Valuation of Goodwill and Intangible Assets
Intangible assets represented $8.0 billion, or 66.2%, of our total assets as of December 31, 2023. Intangible assets consist primarily of goodwill, indefinite-lived intangible assets (such as FCC licenses), and definite-lived intangible assets (such as network affiliation agreements).
The purchase prices of acquired businesses are allocated to the assets and liabilities acquired at estimated fair values at the date of acquisition using various valuation techniques, including discounted projected cash flows, the replacement cost approach and other income, market or cost approaches.
The estimated fair value of an FCC license acquired in a business combination is calculated using a discounted projected cash flow model referred to as the Greenfield Method. The Greenfield Method attempts to isolate the income that is attributable to the license alone. This approach is based upon modeling a hypothetical start-up station and building it up to a normalized operation that, by design, lacks an affiliation with a network (commonly known as an independent station), lacks inherent goodwill and whose other assets have essentially been added as part of the build-up process. The Greenfield Method assumes annual cash flows over a projection period model. Inputs to this model include, but are not limited to, (i) a four-year build-up period for a start-up station to reach a normalized state of operations, (ii) television market long-term revenue growth rate over a projection period, (iii) estimated market revenue share for a typical market participant without a network affiliation, (iv) estimated profit margins based on industry data, (v) capital expenditures based on the size of market and the type of station being constructed, (vi) estimated tax rates in the appropriate jurisdiction, and (vii) an estimated discount rate using a weighted average cost of capital analysis. The Greenfield Method also includes an estimated terminal value by discounting an estimated annual cash flow with an estimated long-term growth rate.
The assumptions used in estimating the fair value of a network affiliation agreement acquired in a business combination are similar to those used in the valuation of an FCC license. The Greenfield Method is also utilized in the valuation of network affiliation agreements except that the estimated market revenue share, estimated profit margins, capital expenditures and other assumptions reflect a market participant premium based on the programming of a network affiliate relative to an independent station. This approach would result in an estimated collective fair value of the FCC license and a network affiliation agreement. The excess of the estimated fair value in this model over the estimated value of an FCC license of an independent station under the Greenfield Method represents the estimated fair value of a network affiliation agreement.
Goodwill represents the excess of the purchase price of a business over the fair value of the net assets acquired.
Subsequent to acquisition, goodwill and FCC licenses are tested for impairment in the fourth quarter each year, or more frequently whenever events or changes in circumstances indicate that such assets might be impaired. For purposes of goodwill impairment tests, the Company has one aggregated television stations reporting unit, because of the stations’ similar economic characteristics, one cable network reporting unit and two digital business reporting units. The Company’s impairment review for FCC licenses is performed at the television station market level.
The Company first assesses the qualitative factors to determine the likelihood of goodwill and FCC licenses being impaired. The qualitative impairment test includes, but is not limited to, assessing the changes in macroeconomic conditions, regulatory environment, industry and market conditions, and the financial performance versus budget of the reporting units, as well as any other events or circumstances specific to the reporting unit or the FCC licenses. If it is more likely than not that the fair value of a reporting unit or an FCC license is greater than its respective carrying amount, no further testing will be required. Otherwise, the quantitative impairment test method is applied.
The quantitative impairment test for goodwill is performed by comparing the fair value of a reporting unit with its carrying amount. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The quantitative impairment test for FCC licenses consists of a market-by-market comparison of the carrying amounts of FCC licenses with their fair values, using the Greenfield Method of discounted cash flow analysis. An impairment is recorded when the carrying value of an FCC license exceeds its fair value.
We test our definite-lived intangible assets and other long-lived assets to be held and used for impairment whenever events or circumstances indicate that their carrying amount may not be recoverable, relying on certain factors including operating results, business plans, economic projections and anticipated future cash flows. The carrying value of a long-lived asset or asset group is considered impaired when the projected future undiscounted cash flows to be generated from the asset or asset group over its remaining life, or primary asset’s life, plus any proceeds from the eventual disposition are less than its carrying value. The Company measures impairment based on the amount by which the carrying value exceeds the estimated fair value of the long-lived asset or asset group. The fair value is determined primarily by using the projected future cash flows discounted at a rate commensurate with the risk involved as well as market valuations.
In the fourth quarter of 2023, using the qualitative impairment test, the Company performed its annual impairment assessment on goodwill attributable to its aggregated television stations reporting unit. Based on the results of such qualitative impairment tests, the Company concluded that it was more likely than not that the reporting unit’s fair value would sufficiently exceed the related carrying amount.
With respect to goodwill allocated to the cable network reporting unit and the two digital reporting units, the Company elected to perform quantitative impairment tests due to recent performance and uncertain economic conditions.
The Company’s assessment indicated that the cable network reporting unit’s fair value exceeded the related carrying amount by approximately 14%, therefore no impairment was recorded. Goodwill allocated to this reporting unit was $400 million as of December 31, 2023. The fair value estimate is management’s estimate based on a valuation report prepared by a third-party valuation firm who used a combination of an income approach, which employs a discounted cash flow model, and a market approach, which consider earnings multiples of comparable publicly traded businesses and comparable market transactions. The income approach was based on a five-year projection model which included assumptions regarding continued growth of viewership at a declining rate of growth over time and monetization thereof, continued growth in distribution revenues and annual increases in operating expenses. The income approach utilized the Company’s income tax rate, a 10% discount rate based on an analysis of comparable companies and a modest terminal growth rate typical of mature cable network businesses. The market approach market based the valuation on earnings multiples of comparable publicly traded businesses with cable networks and comparable cable network transactions. The likelihood of a material impairment is mitigated by the maturity of the network and its significant contractual distribution revenue.
With respect to digital reporting units, the Company’s assessment indicated that one of the digital reporting units exceeded the carrying amount by 2.5%, and therefore no goodwill impairment was identified. Goodwill associated with this reporting was $69 million as of December 31, 2023. The fair value estimate is management’s estimate based on a valuation report prepared by a third-party valuation firm who used a combination of an income approach, which employs a discounted cash flow model, and market approach. The income approach was based on a three-year projection model which included assumptions regarding the recovery of the business from a low in 2023 due to market and other factors to a full recovery to 2022 levels between year 2 and year 3 and then growth thereafter. The income approach utilized the Company’s income tax rate, a 11.5% discount rate based on an analysis of comparable companies and a modest terminal growth rate typical of mature digital businesses. The market approach based the valuation on earnings multiples of comparable publicly traded digital media businesses and market net revenue multiples of comparable digital media transactions. The likelihood of a material impairment is mitigated by the amount of goodwill recorded.
In the second digital reporting unit, the Company identified a goodwill impairment of $19 million (and $16 million impairment on definite-lived intangible assets) and a goodwill impairment of $91 million (and $5 million impairment on definite-lived intangible assets) during the fourth quarter of each calendar years 2023 and 2022. As of December 31, 2023, this second digital reporting unit has no remaining goodwill and no material long-lived intangible assets balance.
Our quantitative goodwill impairment tests are sensitive to changes in key assumptions used in our analysis. In our income approach models, if our projections of revenue growth rates and margins are not realized, if market factors outside of our control, such as increases in discount rates, occur, or if management’s expectations or plans change, including changes to a reporting unit’s long-term operating plans, the Company’s goodwill and other key assets could be impaired in the future. With respect to net revenue and earnings multiples, the key uncertainties are determining the reporting unit’s comparable public companies, comparable transactions and the selection of the market multiples.
The Company performed its annual impairment assessment on FCC licenses for each television station market using the qualitative impairment test. Except for three station markets that indicated unfavorable trends, the Company concluded that it was more likely than not that their fair values exceeded the respective carrying amounts. For the stations that indicated unfavorable trends, management extended its procedures and performed a quantitative impairment test. As of December 31, 2023, the FCC licenses of these stations had a total balance of $64 million, none of such individual FCC licenses had carrying value that were material. The Company’s quantitative impairment test of these assets indicated that each of their estimated fair values (Greenfield Method) exceeded the respective carrying amounts. Thus, no impairment was recorded.
The Company also evaluated its definite-lived intangible assets and other long-lived assets whether events or changes in circumstances indicate that such assets may be impaired. Based on our estimate of undiscounted future pre-tax cash flows expected to result from the use and eventual disposition of these assets, the Company determined that the carrying amounts are recoverable other than the long-lived intangible assets of a digital reporting unit for which an impairment was recognized (discussed above). No other events or circumstances were noted in 2023 that would indicate impairment.
Valuation of Investments
We account for investments in which we own at least 20% of an investee’s voting securities or we have significant influence over an investee under the equity method of accounting. We record equity method investments at cost. For investments acquired in a business combination, the cost is the estimated fair value allocated to the investment.
We evaluate our equity method investments for other-than temporary impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. In 2023, the Company evaluated its equity method investments for OTTI and none was identified. The Company will continue to evaluate its equity method investments for OTTI in future periods.
Pension plans and other postretirement benefits
A determination of the liabilities and cost of Nexstar’s pension and other postretirement plans (“OPEB”) requires the use of assumptions. The actuarial assumptions used in the pension and postretirement reporting are reviewed annually with independent actuaries and are compared with external benchmarks, historical trends and Nexstar’s own experience to determine that its assumptions are reasonable. The assumptions used in developing the required estimates include the following key factors:
•discount rates
•expected return on plan assets
•mortality rates
•retirement rates
•expected contributions
As of December 31, 2023, the effective discount rates used for determining pension benefit obligations were 4.78% to 4.79%. During 2023, the assumptions utilized in determining net periodic benefit credit on our pension plans were (i) 5.53% to 6.38% expected rate of return on plan assets and (ii) 4.98% to 4.99% effective discount rates. As of December 31, 2023, our pension plans’ benefit obligations were $1.7 billion. For the year ended December 31, 2023, our pension plans’ net periodic benefit credit was $36 million. As of December 31, 2023, a 1% change in the discount rates would have the following effects (in millions):
1% Increase
1% Decrease
Projected impact on net periodic benefit credit
$
$
(3)
Projected impact on pension benefit obligations
(132)
For additional information on our pension and OPEB, see Note 10 to our Consolidated Financial Statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K.
Distribution Revenue
We earn revenues from MVPDs and OVDs for the retransmission of our broadcasts and the carriage of NewsNation. These revenues are generally earned based on a price per subscriber of the distributor within the retransmission or carriage area. The distributors report their subscriber numbers to us generally on a 30- to 60-day lag, generally upon payment of the fees due to us. Prior to receiving the reports, we record revenue based on management’s estimate of the number of subscribers, utilizing historical levels and trends of subscribers for each distributor. Adjustments associated with the resolution of such estimates have, historically, been inconsequential.
Income Taxes
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities. A valuation allowance is applied against net deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. While we have considered future taxable income in assessing the need for a valuation allowance, in the event that we were to determine that we would not be able to realize all or part of our deferred tax assets in the future, an adjustment to the valuation allowance would be charged to income in the period such a determination was made.
We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities. The determination is based on the technical merits of the position and presumes that each uncertain tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information. The estimate of the Company’s tax liabilities relating to uncertain tax positions requires management to assess uncertainties and to make judgments about the application of complex tax laws and regulations. We recognize interest and penalties relating to income taxes as components of income tax expense.
Recent Accounting Pronouncements
Refer to Note 2 of our Consolidated Financial Statements in Part IV, Item 15(a) of this Annual Report on Form 10-K for a discussion of recently issued accounting pronouncements, including our expected date of adoption and effects on results of operations and financial position.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk
Interest Rate Risk
The Company’s exposure to market risk for changes in interest rates relates primarily to its long-term debt obligations.
The term loan borrowings under the Company’s senior secured credit facilities bear interest at rates ranging from 6.85% to 7.85% as of December 31, 2023, which represent (i) the base rate, the SOFR plus (ii) a credit spread adjustment, and (iii) the applicable margin, as defined. Interest is payable in accordance with the credit agreements.
Based on the outstanding balances of the Company’s senior secured credit facilities (term loans and revolving loans) as of December 31, 2023, an increase in each of SOFR by 100 basis points would increase our annual interest expense and decrease our cash flow from operations by $42 million (excluding tax effects). A decrease in each of SOFR by 100 basis points would decrease our annual interest expense and increase our cash flow from operations by $42 million (excluding tax effects). Our 5.625% Notes due July 2027 and 4.75% Notes due November 2028 are fixed rate debt obligations and therefore are not exposed to market interest rate changes. As of December 31, 2023, the Company has no financial instruments in place to hedge against changes in the benchmark interest rates on its senior secured credit facilities.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data
Our Consolidated Financial Statements are filed with this report. The Consolidated Financial Statements and Supplementary Data are included in Part IV, Item 15(a) of this Annual Report on Form 10-K.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Nexstar’s management, with the participation of its Chairman and Chief Executive Officer along with its Chief Financial Officer, conducted an evaluation as of the end of the period covered by this Annual Report of the effectiveness of the design and operation of Nexstar’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.
Based upon that evaluation, Nexstar’s Chairman and Chief Executive Officer and its Chief Financial Officer concluded that as of December 31, 2023, Nexstar’s disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed in the reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to Nexstar’s management, including its Chairman and Chief Executive Officer and its Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
During the quarterly period as of the end of the period covered by this report, there have been no changes in Nexstar’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Nexstar’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023 based upon the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).
Based on management’s assessment, we have concluded that our internal control over financial reporting was effective as of December 31, 2023.
PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 31, 2023 as stated in their report which appears herein.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information
Rule 10b5-1 Trading Plans
On December 26, 2023, Perry Sook, our Chairman and Chief Executive Officer, adopted a 10b5-1 Trading Plan (“Sook Sales Plan”) that is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The Sook Sales Plan provides for the exercise and sale of 100,000 stock options (such stock options were awarded on January 14, 2015 and are scheduled to expire on January 14, 2025). The Sook Sales Plan, which was entered into during an open trading window under the Company’s insider trading policy, will be in effect until the earlier of (a) November 13, 2024, and (b) the date on which the total shares subject to the Sook Sales Plan have been sold.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance
Information concerning directors that is required by this Item 10 will be set forth in the Proxy Statement to be provided to stockholders in connection with our 2024 Annual Meeting of Stockholders (the “Proxy Statement”) or in an amendment to this Annual Report on Form 10-K under the headings “Directors,” “Corporate Governance,” and “Delinquent Section 16(a) Report,” which information is incorporated herein by reference.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation
Information required by this Item 11 will be set forth in the Proxy Statement under the headings “Compensation of Named Executive Officers” and “Compensation of Directors,” which information is incorporated herein by reference. Information specified in Items 402(k) and 402(l) of Regulation S-K and set forth in the Proxy Statement is incorporated by reference.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management, and Related Stockholder Matters
Information required by this Item 12 will be set forth in the Proxy Statement under the headings “Beneficial Ownership of Nexstar Common Stock” and “Compensation of Named Executive Officers,” which information is incorporated herein by reference.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information required by this Item 13 will be set forth in the Proxy Statement under the heading “Certain Relationships and Related Person Transactions,” which information is incorporated herein by reference.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accountant Fees and Services
Information required by this Item 14 will be set forth in the Proxy Statement under the heading “Independent Registered Public Accounting Firm Fees and Other Matters,” which information is incorporated herein by reference.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules
(a) Documents filed as part of this report:
(1)Consolidated Financial Statements. The Consolidated Financial Statements of Nexstar Media Group, Inc. listed on the index on page have been included beginning on page of this Annual Report on Form 10-K.
(2)Financial Statement Schedules. The schedule of Valuation and Qualifying Accounts appears in Note 18 to the Consolidated Financial Statements filed as part of this report.
(3)Exhibits. The exhibits listed on the accompanying Index to Exhibits on this Annual Report on Form 10-K are filed, furnished or incorporated into this Annual Report on Form 10-K by reference, as applicable.