Nexstar Media Group Inc.'s ad revenue took a hit in the first quarter amid continued softness with some key categories and unfavorable comparisons with the 2024 election cycle. But the nation's largest operator of TV stations does not foresee economic uncertainties tied to tariffs having a major impact on ad revenues this year.
Speaking on the company's May 8 earnings call with analysts, Nexstar Chairman and CEO Perry Sook downplayed the potential macroeconomic effect of the Trump administration's tariffs and trade policies, given the composition of the company's revenues.
"Only about 40% of nonpolitical advertising revenue, or 15% of our total revenue, is tied to goods-based businesses that could potentially be impacted by tariffs," Sook said. "The remaining 60% of our nonpolitical advertising revenue comes from services and paid programming, which actually grew during the 2018 trade war."
As to the first quarter, Nexstar's ad revenue was down 10.2% year over year to $460 million. The measure reflected a $32 million drop in political advertising to $6 million, coming mostly from the high-profile Wisconsin State Supreme Court election. There was also a $20 million, or 4.2%, drop in nonpolitical ad revenue tied to market softness.
President and COO Michael Biard told analysts the insurance category registered the most significant retreat. He noted that while there were declines in auto advertising with Tier 2, or regional dealer groups, and Tier 3, or local showrooms, some of those decreases were countered by more spending from Tier 1 manufacturers. Biard also pointed to a tough sports betting category comparison as the 2024 period benefited from the launch of the practice in North Carolina, with nothing comparable “coming online this year.”
On the upside, there were gains with the legal, home repair and travel sectors, "demonstrating the continued resilience of service-based and intent-driven advertising.”
Biard said there was slight growth in national ad business, while local ad sales benefited from high single-digit growth with digital properties.
Looking at the second quarter, Biard said nonpolitical advertising is forecast to be down in the mid-single-digit range on a year-over-year basis, similar to first-quarter results.
Nexstar's ad performance was also shaped by the Super Bowl, which aired this year on FOX (US), and set a single-day ad record for parent Fox Corp. Nexstar is the largest owner of FOX-affiliated stations, notably WDAF-TV in Kansas City. The Chiefs' run at an unprecedented Super Bowl three-peat was thwarted by the Philadelphia Eagles.
With distribution revenue edging up 0.1% to $762 million and other revenue increasing 9.1% to $12 million, Nexstar's first-quarter total revenue decreased 3.9% to $1.23 billion from $1.28 billion a year ago.
Net income attributable to Nexstar declined to $108 million, or $3.37 per share, from $175 million, or $5.16 per share, in the first quarter of 2024.
