Nexstar Media Eyes 2026 Rebound After Political Slump
Nexstar Media Group ((NXST)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Nexstar Media Group’s latest earnings call painted a mixed picture for investors. Management acknowledged sharp year‑over‑year declines in revenue, EBITDA and free cash flow due to the off‑cycle year for political advertising. Yet they stressed that digital growth, network audience gains and tight cost control are positioning the company for a stronger 2026.
2026 Stand‑alone EBITDA Outlook Signals Underlying Strength
Nexstar set stand‑alone adjusted EBITDA guidance for 2026 at $1.95 billion to $2.05 billion, excluding the impact of the TEGNA deal. This range underlines management’s confidence that core profitability and cash generation can remain solid even amid industry disruption and shifting ad patterns.
Digital Revenue Momentum Shifts Mix Beyond Political Cycles
Digital revenue grew at a high single‑digit pace in 2025, with local digital businesses delivering double‑digit gains. Executives expect digital revenue to surpass national TV advertising in 2026, marking a strategic pivot toward higher‑growth, less cyclical revenue streams.
The CW: Rising Viewership and Path Toward Profitability
The CW network posted a 19% year‑over‑year viewership increase in 2025, becoming the 10th most‑watched ad‑supported network and the second fastest‑growing. Cash flow improved roughly 32%, and management expects losses to narrow by about 30% in 2026, with break‑even and profitability targeted for the fourth quarter.
NewsNation Delivers Breakout Ratings and Awareness
NewsNation achieved its strongest year ever across total day, primetime and daytime, making it the fastest‑growing cable news network in the adults 25–54 demo in 2025. Consumer awareness climbed above 40% overall and more than 50% among news viewers, showing growing traction against entrenched rivals.
Distribution and Affiliation Deals Underpin Fee Growth
Nexstar renewed distribution agreements covering over 60% of its subscriber base in 2025, shoring up a crucial revenue line. The company also extended ABC and MyNetworkTV affiliations through 2027 and renegotiated CW carriage covering around two‑thirds of its subscribers, supporting low‑ to mid‑single‑digit distribution growth in 2026.
Q4 Distribution Revenue Edges Up Despite Cord‑Cutting
Fourth‑quarter 2025 distribution revenue came in at $720 million, up $6 million or 0.8% year over year. Higher affiliate rates, growth in virtual MVPD subscribers and incremental CW affiliations offset ongoing traditional MVPD subscriber attrition.
Cost Discipline Supports Margins Amid Revenue Pressure
Recurring cash operating expenses declined 1.6% for the year, showing tangible progress on efficiency. In Q4, combined direct operating and SG&A costs (excluding D&A and corporate) fell $7 million, or 0.9%, and management signaled more savings in 2026 from centralization, automation and revamped incentives.
Balance Sheet Positioned for TEGNA While Preserving Flexibility
Total debt stood at $6.3 billion at year‑end 2025, with net leverage at 3.09x and a first‑lien covenant ratio of 1.71x versus a 4.25x limit. Management emphasized this covenant headroom as it prepares to fund the TEGNA acquisition, while maintaining an investment‑grade mindset on leverage.
Sports Programming Fuels Audience and Monetization
Management highlighted sports as a key driver of viewing and future pricing power, noting NFL audience gains of 7% year over year and NBA regular‑season viewership up 16% with its return to broadcast. On The CW, NASCAR rose 10%, ACC football 26% and early‑season ACC basketball 35%, giving the network more leverage with advertisers and distributors.
Capital Returns Moderated as Cash Is Marshaled for M&A
Nexstar returned $56 million to shareholders in Q4 and $351 million for the full year, equal to 42% of adjusted free cash flow. This comprised $226 million in dividends and $125 million in share buybacks, trimming the share count by about 1% while still preserving capital ahead of the TEGNA purchase.
Q4 Revenue Hit Hard by Political Advertising Lapse
Fourth‑quarter net revenue fell to $1.29 billion, down 13.4% compared with the prior‑year political cycle quarter. The company stressed that the decline primarily reflects the absence of heavy election‑year spending rather than structural deterioration in the underlying business.
Advertising Revenue Suffers Steep Drop on Political Pullback
Q4 advertising revenue dropped to $549 million, a 27.6% year‑over‑year decline. Political advertising plunged by $233 million to just $21 million, accounting for most of the downturn and highlighting the volatility tied to political ad timing.
EBITDA and Free Cash Flow Compress in Off‑Cycle Quarter
Adjusted EBITDA for Q4 was $433 million, down $195 million from the prior year, with margins at 33.6%. Adjusted free cash flow slid to $214 million from $411 million, a roughly 48% drop that management linked to lower political revenue and timing factors rather than a change in structural profitability.
Equity Investment Weakness Adds to Earnings Headwinds
Income from equity‑method investments, mainly Nexstar’s 31% stake in TV Food Network, fell 67% in the quarter, down $12 million year over year. The company also booked a write‑down on this investment, reflecting ongoing challenges in the traditional cable network ecosystem.
TEGNA‑Related Costs Weigh on Corporate Expense
Corporate expense rose to $65 million in Q4 2025 from $48 million a year earlier, with the $17 million increase tied largely to one‑time costs from the proposed TEGNA acquisition. These transaction expenses are expected to be temporary but are pressuring near‑term operating income and cash flow.
Distribution Renewal Risk Amid Continuing Subscriber Erosion
While Nexstar secured many renewals, management flagged continued MVPD subscriber attrition as a headwind. Roughly 30% of subscribers are up for renewal in 2026, introducing execution risk that could weigh on distribution revenue if cord‑cutting accelerates or negotiations turn more contentious.
Auto Advertising Weakness Remains a Drag
The auto category remained the weakest segment of Nexstar’s ad portfolio in 2025, continuing a multi‑year trend. Digital offerings helped offset some of the softness, but the slowdown in automotive spending was still a notable contributor to overall advertising pressure.
Higher Cash Taxes Expected to Tighten 2026 Cash Flows
Management guided to 2026 cash taxes of $315 million to $325 million, about $208 million higher than in 2025. The increase reflects anticipated profit improvement in the election year and will be an important factor for investors modeling free cash flow and leverage.
Cash Balance Down as Company Prepares for TEGNA Deal
Nexstar ended the quarter with $280 million in cash, including $13 million related to The CW, down as it reallocates capital toward the TEGNA acquisition. The company has kept its dividend intact but has moderated buybacks, limiting near‑term flexibility for additional shareholder returns.
Election Cycle Keeps Earnings Profile Lumpy
Management reiterated that earnings remain highly sensitive to political advertising cycles, with roughly 20% of 2026 political revenue expected in the first half and 80% in the second half. This timing will likely produce pronounced swings in quarterly revenue and margins, a feature long familiar to broadcast investors.
Guidance: Political Tailwinds and Digital Growth in 2026
For 2026, Nexstar reaffirmed stand‑alone adjusted EBITDA guidance of $1.95 billion to $2.05 billion and expects net distribution revenue to grow mid‑single digits. The company sees political ads capturing a low double‑digit share of total broadcast political spend, digital revenue surpassing national TV advertising, The CW reaching profitability in Q4, and capital needs dominated by interest, taxes, moderate capex and mandatory debt repayment.
Nexstar’s call underscored a business still tied to volatile election‑driven advertising but increasingly buffered by digital growth, network ratings gains and disciplined cost management. While 2025 results were weighed down by political comparisons, management’s 2026 targets and strategic moves around The CW, NewsNation and the TEGNA deal suggest a company leaning into scale and diversification to drive long‑term shareholder value.
