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Nexstar's political ad revenue exceeds 2020 levels through Election Day

Nexstar Media Group Inc.'s midterm cycle political ad revenue eased past its take for the presidential cycle in 2020.

The nation's largest operator of TV stations crossed the $500 million political-ad-revenue plateau as of Nov. 8. The company said with $260 million in net political revenue booked for the fourth quarter, the category's total is 103% of what it had registered as of Election Day in 2020.

Nexstar Chairman and CEO Perry Sook noted on the Nov. 8 earnings call that the full take for the 2020 presidential cycle benefited, post-Election Day, from Senate runoffs in Georgia.

"Depending on who you talk to, there will either be or not be a runoff election in Georgia after tonight," Sook said.

Nexstar has benefited from strong spending around key races and primary elections for Senate seats in Nevada, Ohio and Pennsylvania, as well as gubernatorial contests in those states. The governor races in Illinois, Texas, Oregon, Rhode Island and New Mexico were also notable drivers.

During the third quarter, Nexstar's political advertising revenue reached $129.3 million, 28% ahead of pro forma levels in the third quarter of the 2018 midterm election cycle. Political action committee and issue spending represented 59% of revenue, while candidate spending accounted for the balance.

Tied to its competitive Senate race, Nevada will be Nexstar's top-billing state. KLAS-TV, the company's CBS (US) affiliate in Las Vegas, will book the most political ad revenue of any of its stations, according to Sook.

Slight core retreat

Given the political ad activity, Nexstar stations faced crowd-out situations with their inventory.

Core advertising was down 7.6% in the third quarter to $399.7 million. The company said the downturn stemmed from inventory displacement as well as double-digit declines in national spot advertising and comparisons to the year-earlier period that benefited from the Tokyo Olympics.

Local advertising, which accounts for 70% of the company's core revenue stream, was off 2%.

COO Tom Carter said about half of Nexstar's ad categories increased versus the prior-year period. Auto advertising, the company's largest category, returned to growth, driving a mid-single-digit advance, boosted by improved vehicular supply and pent-up consumer demand. Sook said additional deliveries to dealers could be a tailwind in 2023 core advertising.

Betting the under

Categories on the downside included insurance; direct response; government services, which were tied to COVID-19-related marketing funds running out; medical healthcare; and sports betting and gaming.

While some of the decline in sports betting advertising was due to some budgets shifting toward national outlets, the most impactful element in the period was the redirection of spending by sports betting and gaming companies to a pair of California ballot measures.

If those attendant political advertising dollars were included, Nexstar would have registered a gain with the sports betting and gambling category.

Looking ahead, Carter said the company remains cautiously optimistic about this category as online/mobile betting became active in Kansas in September and begins in January in Ohio, where Nexstar has a large presence. Massachusetts also is expected to enact the practice in 2023.

Nexstar reported consolidated third-quarter revenue of almost $1.27 billion, or 9.7% more than in the year-earlier period.

Third-quarter net income attributable to the company totaled $288.7 million, or $7.30 per share, up from $169.6 million, or $3.90 per share, in the corresponding 2021 period.

The S&P Capital IQ consensus EPS estimate for the third quarter was $5.41 on a GAAP basis and $5.69 on a normalized measure.