Nexstar (NXST) Q1 2026 Earnings Transcript

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DATE

Thursday, May 7, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Perry A. Sook
• Chief Operating Officer — Michael Biard
• Chief Financial Officer — Lee Ann Gliha

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TAKEAWAYS

• Net revenue -- $1.4 billion for the quarter, including 13 days of TEGNA results, representing a $162 million, or 13.1%, increase year over year.
• Adjusted EBITDA -- $470 million, up $89 million from last year, with TEGNA operations contributing $31 million of the increase.
• Adjusted free cash flow -- $420 million, a $72 million increase compared to 2025; legacy Nexstar generated $400 million of this.
• Debt repayment -- $182 million repaid through April 30, including full repayment of a $150 million short-term Term Loan A after quarter end.
• Total outstanding debt -- $12.1 billion at quarter end, up from $6.3 billion at year end due to the TEGNA acquisition.
• Political advertising revenue -- $78 million on a combined basis, up 89% from 2022 and 19% from 2024, with key states cited as drivers.
• Non-political advertising performance -- Up 1.2% on a combined basis, with segment growth at TEGNA attributed to NBC’s Super Bowl and Olympic coverage.
• Digital advertising revenue -- Mid-single-digit percentage growth overall, driven by local digital but partially offset by declines in TEGNA’s Premion segment following loss of a major customer.
• Expense breakdown -- Direct operating and SG&A expenses rose $76 million, almost entirely reflecting $73 million of recurring costs from TEGNA and $4 million in one-time cost reduction expense at legacy Nexstar.
• Corporate expense -- $106 million, up $54 million from previous year, including $38 million of one-time costs tied to TEGNA acquisition.
• Sports programming expansion -- The CW secured a multi-year deal with the Mountain West Conference for 13 football and 35 basketball games annually, plus six Banana Ball games, resulting in nearly half of CW's 2026 schedule being sports or sports-adjacent.
• Digital partnerships -- New deals with ESPN (exclusive streaming for CW Sports content with ESPN Unlimited subscription) and Roku (CW-branded hub for next-day streaming) announced to broaden audience and advertising reach.
• NewsNation ratings -- Achieved 85% year-over-year growth in total primetime viewers and 100% growth among adults 25–54 in March 2026; ranked 35th among total household viewership for all ad-supported cable networks in the quarter.
• Amortization of broadcast rights -- $72 million, down $16 million year over year primarily due to timing of CW programming.
• Food Network investment income -- Declined by $4 million, or 50%, attributed to TV Food Network's lower revenue.
• Dividend policy -- $56 million returned to shareholders via quarterly dividends, maintaining a 1.86¢ per share payout yielding 3.7% and placing the company among the “top tier of all dividend payers in the S&P 400.”
• Cash balance -- $379 million at quarter end, with $12 million from The CW; CapEx for the quarter was $22 million, a $13 million decline from the previous year due to TEGNA integration timing.
• Credit agreement impact -- First lien covenant ratio stands at 2.94x, below the raised covenant limit of 4.75x, with total net leverage at 3.84x; agreement allows EBITDA adjustments for TEGNA as if acquired at period start and add-backs for integration costs and synergies.
• Q2 financial outlook -- CapEx projected near $45 million, cash taxes expected around $152 million, and run-rate quarterly interest expense projected at $187.5 million based on current balances.
• TEGNA operational structure -- Due to a court order, TEGNA operates as a separate subsidiary under its board with day-to-day autonomy, but financial oversight and board-level control remain with Nexstar; excess TEGNA free cash flow is available for joint debt repayment.
• Legal proceedings update -- Ongoing litigation with DIRECTV and some state AGs challenging the TEGNA transaction; appellate and district court actions in progress, plus a challenge to FCC approval pending, with no current non-disclosed legal threats identified by management.
• Guidance policy -- No forward-looking guidance provided due to current litigation and operational uncertainty; management encourages review of TEGNA’s pre-deal public projections.
• Advertising trends -- Second-quarter non-political advertising expected to decline a mid-single-digit percentage on a combined basis due to a weaker environment, with no single category representing a disproportionate decline.
• Attrition monitoring -- TEGNA prohibited from reducing headcount during the court-ordered hold-separate period, and management reports no unusual attrition trends detected during integration or pending litigation.

SUMMARY

Nexstar Media Group (NASDAQ:NXST) closed its acquisition of TEGNA, significantly increasing scale and resulting in total outstanding debt rising to $12.1 billion at quarter end. Ongoing legal challenges by DIRECTV and state attorneys general require TEGNA to operate separately, limiting integration and longer-term guidance, but board-level financial control and access to excess TEGNA free cash flow for debt repayment remain intact. Notable sports and digital partnership deals were struck with ESPN and Roku to grow The CW’s reach and revenue potential. Political advertising outperformed historical cycles, and NewsNation led industry primetime audience growth for both total viewers and key demographics in March 2026.

• The company maintains its quarterly dividend policy and has prioritized debt reduction post-acquisition, consistent with stated capital allocation strategy.
• Amortization and investment income impacts were primarily attributed to changes in timing for CW programming and lower results at TV Food Network.
• Management confirms all current litigation is disclosed, and no additional legal processes are underway outside the mentioned appeals and court challenges.
• Digital expansion through partnerships, rather than platform building, continues to shape the company’s approach to scaling reach and monetizing content.
• The TEGNA board comprises Nexstar executives, preserving financial oversight while operational autonomy persists under court-mandated governance.
• Legacy Nexstar business units achieved additional cash operating expense savings, despite the majority of incremental costs arising from TEGNA consolidation and deal expenses.

INDUSTRY GLOSSARY

• Premion: TEGNA's digital advertising segment focused on over-the-top (OTT) and connected TV (CTV) inventory.
• MVPD: Multichannel Video Programming Distributor; entities such as cable and satellite TV providers delivering multiple television channels.
• vMVPD: Virtual Multichannel Video Programming Distributor; services delivering linear TV channels via internet, such as YouTube TV or Hulu + Live TV.
• AVOD: Advertising Video On Demand; streaming platforms that generate revenue primarily through advertisements rather than subscription fees.
• First lien covenant ratio: A leverage ratio measuring a company’s senior secured debt to EBITDA, subject to limiting covenants in credit agreements.

Full Conference Call Transcript

Perry A. Sook: Thank you, Joseph, and good morning, everyone. We appreciate you all joining us today. Michael Biard, our Chief Operating Officer, and Lee Ann Gliha, our Chief Financial Officer, are with me on the call here as always. Nexstar Media Group, Inc. hit the ground running in 2026, advancing our strategic priorities across multiple fronts. We closed our landmark acquisition of TEGNA, following FCC and DOJ approval. We continue to build and grow The CW and NewsNation as national networks. And we delivered strong quarterly net revenue, adjusted EBITDA, and adjusted free cash flow. This year marks the 30th anniversary of Nexstar Media Group, Inc.'s founding, starting with a single television station in Scranton, Pennsylvania.

From the very beginning, Nexstar Media Group, Inc.'s growth and success have been grounded in our steadfast commitment to high-quality local broadcast journalism, which we believe is essential to the communities we serve and to American democracy. While our core mission has not wavered, the competitive landscape has changed dramatically in those 30 years. Big tech, legacy big media, and distribution companies have grown exponentially, and despite consolidation within our industry, Nexstar Media Group, Inc. still operates with a fraction of their ubiquitous reach and financial resources, prohibiting us and every other company in our industry from competing on a level playing field.

Against this backdrop, our acquisition of TEGNA represents an important step in solidifying our future and our ability to continue providing these valuable services to local communities across the United States. I will now spend a few minutes bringing you up to speed on where we are today with the acquisition of TEGNA. I will start by saying the situation that we are dealing with is unusual, and I would caution against attempting to draw legal conclusions at this stage. We will be as transparent as possible under the circumstances and share what we can at this time. As you know, the transaction closed on March 19 after receiving all required regulatory approvals.

As part of that process, we engaged extensively with the FCC and DOJ and provided more than 7 million pages of documentation in response to their inquiries. We also made meaningful concessions to secure our approvals, including agreeing to increase local news programming in nine markets, divest stations in six markets within two years, and extend expiring retransmission agreements through November 30. Under ordinary circumstances, that process, with the concessions and the regulatory approvals, would allow us to move forward post-closing with our integration plans. However, DIRECTV, along with a number of state AGs, filed suit seeking to block the transaction.

DIRECTV is a sophisticated company owned by a private equity firm, TPG, with its own commercial interests just as we have ours. That said, the issue before the courts is not the relative commercial negotiating positions of the parties. It is whether this transaction serves the broader public interest, including American consumers and the preservation of local journalism. As such, we believe we will prevail on the merits of this case. We are confident in our arguments, expressed in detail in the FCC's order approving the transaction, that a stronger, more financially resilient local broadcast industry is in the public's best interest.

We believe this is a fight worth having for us, for our industry, and for the future of local journalism. Nexstar Media Group, Inc. is a company built on localism, and our track record demonstrates that scale and operational strength are critical to sustaining high-quality local news programming. As the company has grown, we have consistently made meaningful investments in our station infrastructure and in expanding local news programming, which is the most viewed and the most valued programming that we offer. This transaction represents an opportunity to further our longstanding commitment to serving communities of all sizes with high-quality free over-the-air programming, fact-based journalism, and innovative digital and marketing solutions for both our viewers and our advertising partners.

We are focused on presenting the strongest possible legal arguments to the court. To that end, we have engaged Beth Wilkinson of Wilkinson Stekloff to lead our trial and appellate efforts, supplementing our formidable antitrust counsel at Morrison Foerster. Beth is one of the nation's most highly regarded trial lawyers, having recently led the defense team that secured a victory for the NFL and its 32 member teams in a major antitrust class action suit challenging the Sunday Ticket distribution and related media agreements. With our expanded legal team in place, we move forward with complete confidence in the merits of our case and our ability to bring this process to a successful conclusion.

As far as next steps are concerned, there are multiple legal proceedings underway. First, we filed our notice of appeal of the preliminary injunction before the Ninth Circuit Court of Appeals. Second, the trial in the U.S. District Court for the Eastern District of California. And finally, there is also a separate challenge to the FCC approval of the transaction pending before the D.C. Circuit Court. The court has already denied a request for an emergency stay, finding that it lacks jurisdiction at this stage. Both we and the FCC have been directed to file our responses to the petition by May 11.

While we do not have control over the various courts' timeline, in the meantime, in compliance with the court order, Nexstar Media Group, Inc. and TEGNA are operating separately, and we are proud of both teams' continuing focus on execution and their local community commitments. Now let us turn to the first quarter highlights, which include 13 days of the results of TEGNA. In the quarter, we delivered record net revenue of $1.4 billion and strong adjusted EBITDA and adjusted free cash flow of $470 million and $420 million, respectively.

At our legacy Nexstar Media Group, Inc. business units, we made strong progress toward our goal of achieving additional operating expense savings driven by further cost reductions at The CW and broader core operating efficiency. The CW network improved year-over-year profitability in the first quarter and is well on its way to achieving profitability by the fourth quarter of this year. Launched just five and a half years ago and featuring Nexstar Media Group, Inc.'s enterprise-wide commitment to unbiased and fact-based journalism, NewsNation was the fastest growing network in primetime across all major broadcast and cable networks in March 2026, growing 85% in total viewers and 100% among adults 25–54 compared to the prior year.

The network now ranked 35th in total household viewing for all primetime ad-supported cable networks in the first quarter. As you will hear more from Lee Ann Gliha later, we continue to execute on our capital allocation plan. During the quarter, we returned $56 million to shareholders in the form of dividends and have maintained our 1.86¢ per share quarterly dividend, which represents a 3.7% yield, placing Nexstar Media Group, Inc. in the top tier of all dividend payers in the S&P 400. We also remain focused on deleveraging and repaid $182 million in debt through April 30. In closing, free universal access offered by local broadcast television is not just convenience.

It is an essential public service, and central to Nexstar Media Group, Inc.'s mission. If local broadcasters are to continue providing these essential services for future generations, we must be allowed to operate our business in a manner that accurately reflects today's market realities. Now let me turn the call over to Lee Ann Gliha to provide a little more color on the transaction and the interim TEGNA operations and our reporting until the court cases are heard. Lee Ann?

Lee Ann Gliha: Thank you, Perry, and good morning, everyone. I wanted to jump on the call today a little out of order to provide you some color on what you will hear from us on the financials and operations given the current situation. Operationally, we are in a bit of an unprecedented place right now with a court order until we can be heard by the appellate court, go to trial, or settle the case. To be clear, we own TEGNA. It is a subsidiary of Nexstar Media Inc., our primary operating subsidiary. And we can use excess cash flow for the combined debt repayment as was our plan. As Perry noted, we repaid $182 million of debt through April 30.

We can also execute on whatever actions we need to accomplish our financial reporting and internal control oversight. But as described in the court order, we must hold separate the assets of the TEGNA subsidiary. What this effectively means is TEGNA is operating as it did prior to the transaction, including operating under its own retransmission agreements. All of this, however, remains in flux pending the natural progression of litigation. In addition, the operations of TEGNA will be under the purview of the team at TEGNA rather than under Nexstar Media Group, Inc.'s day-to-day management. So, given the number of variables, I am sure you will appreciate that for now, forward-looking guidance will be limited.

We understand the market does not like uncertainty, so we are going to do our best to keep you up to speed as much as we can given the constraints placed upon us. The good news is TEGNA was a public company, so there is plenty of comparable financial data for you to review along with the longer-term projections they provided in their proxy. Now I am going to turn the call over to Michael Biard to provide some color on our results, primarily on the revenue side of the P&L, and then I will return for some more discussion on expenses and capital allocation. Michael?

Michael Biard: Thank you, Lee Ann, and good morning, everyone. As noted in this morning's press release and Perry A. Sook's remarks, Nexstar Media Group, Inc.'s consolidated financial results for the three-month period ending 03/31/2026 include 13 days of TEGNA operations, while the comparable 2025 period reflects only Nexstar Media Group, Inc.'s legacy business units. The company delivered first quarter net revenue of $1.4 billion, an increase of $162 million, or 13.1%, compared to the prior year. Among our top-performing advertising categories at legacy Nexstar Media Group, Inc. were department and retail stores, attorneys, and gaming and sports betting, while drugstores and medication, packaged goods, and radio/TV/newspaper/cable advertisers had the largest declines.

However, there were no major category outliers in terms of positive or negative performance. On a combined basis, non-political advertising was up 1.2% as TEGNA's large portfolio of NBC affiliations benefited from NBC's broadcast of the Super Bowl and the Olympics in the first quarter. In addition, on a combined basis, overall digital advertising revenue increased a mid-single-digit percentage, driven by strong local digital revenues offset in part by continued declines at TEGNA's Premion segment, due primarily to the loss of a major customer in 2025. For the second quarter, including TEGNA on an as-combined basis, non-political advertising is expected to decline mid-single digits due to a weaker advertising environment.

Legacy Nexstar Media Group, Inc. and TEGNA both delivered strong first quarter political advertising revenue driven by strong primary and early spending. As reported, political advertising was $46 million, but on a combined basis, political advertising in Q1 was $78 million, up 89% versus 2022 and 19% versus 2024, driven by strong spending in key states of Texas, Illinois, California, Michigan, Georgia, and Maine. According to AdImpact, industry-wide broadcast political advertising spending was up 79% in the first quarter versus the comparable election cycle in 2022, and up 13% versus 2024, demonstrating the continued importance of broadcast television for candidates and campaigns seeking to reach and engage voters.

We anticipate a favorable 2026 political season consistent with our combined historical track records and are prepared at legacy Nexstar Media Group, Inc. to manage any changes regarding access to lowest unit rate by PACs and parties without materially impacting our performance. Turning to The CW, we continue executing our strategic plan and remain on track to achieve profitability in the fourth quarter, with the expectation that we will improve full-year losses by more than 30% this year. While we are facing some near-term advertising headwinds related to Nielsen's transition to big data measurement, improved distribution from our 2025 affiliation renewal cycle will more than offset those impacts.

We are also further strengthening The CW's burgeoning sports programming with a multiyear broadcast partnership with the Mountain West Conference beginning this fall and continuing through the 2030–31 seasons. Under that agreement, The CW will televise 13 football games annually, along with 20 men's and 15 women's basketball games each season. In addition, we added six Banana Ball games to our schedule for May and June, broadening the network's overall appeal and audience reach. With 148 additional hours of programming airing in 2026, nearly half of The CW schedule will be sports or sports-adjacent. Importantly, we are continuing to drive strong results from our sports investments.

The NASCAR O'Reilly Auto Parts Series on The CW has delivered more than 1 million total viewers for each of its first 12 races in the 2026 season. In addition, ACC men's and women's basketball concluded the 2025–26 season with record viewership, with total audience increasing 6% for the men's games and 26% for the women's. On the digital front, the marketplace is increasingly endorsing the value of The CW programming, and we are strengthening our brand equity by expanding distribution and unlocking new advertising opportunities through groundbreaking partnerships with leading digital platforms. We recently announced a deal with ESPN that will make the ESPN app and website the exclusive streaming home for all CW Sports.

Beginning this summer, fans with an ESPN Unlimited subscription will be able to stream CW Sports live across devices and platforms, complementing our free over-the-air broadcasts and MVPD and vMVPD distribution while significantly extending our reach to new audiences and advertisers through ESPN's best-in-class platform. We also announced a partnership with Roku, the largest AVOD platform in the United States, which will bring CW Entertainment programming to The Roku Channel for next-day streaming beginning with the broadcast season this fall. This partnership will provide access to more than half of U.S. broadband households through a dedicated CW-branded vertical hub, further enhancing our digital footprint and monetization capabilities.

To close, we are focused on expanding reach and unlocking new monetization opportunities across our portfolio by leveraging our growing sports programming, multiplatform distribution, and digital partnerships to drive incremental value. At The CW, this includes scaling live sports and extending distribution through partnerships like ESPN and Roku. At NewsNation, we continue to build a differentiated, fact-based national news offering that can be monetized across linear, digital, and on-demand platforms. Consistent with Nexstar Media Group, Inc.'s view that programming must reach audiences wherever they are, we are prioritizing broader distribution, improved ad monetization across platforms, and exploiting new revenue streams that position us to compete more effectively in a rapidly evolving media landscape.

And with that, it is my pleasure to turn the call back over to Lee Ann Gliha for the remainder of the financial review.

Lee Ann Gliha: Hello again. Combined first quarter direct operating and SG&A expenses, excluding depreciation and amortization and corporate expenses, increased by $76 million, driven primarily by $73 million of recurring incremental expense from the acquisition of TEGNA and $4 million of one-time expenses related to cost reduction initiatives taken at legacy Nexstar Media Group, Inc. Excluding one-time expenses, first quarter recurring cash operating expenses were lower by $1 million for Nexstar Media Group, Inc.'s legacy business units. Q1 2026 corporate expense was $106 million, including non-cash compensation expense of $20 million, compared to $52 million, including non-cash compensation expense of $18 million, in 2025.

The increase of $54 million is primarily due to $38 million of one-time costs associated with our TEGNA acquisition. Q1 2026 amortization of broadcast rights included in our definition of adjusted EBITDA was $72 million, a reduction of $16 million from $88 million in 2025, primarily due to timing of programming at The CW. Q1 2026 income from equity method investments, primarily reflecting our 31% ownership in TV Food Network, declined by $4 million in the quarter, or 50%, primarily related to TV Food Network's lower revenue. Putting it all together, on a consolidated basis, first quarter adjusted EBITDA was $470 million representing a 33.7% margin and an increase of $89 million from the 2025 first quarter of $381 million.

TEGNA operations accounted for $31 million of this difference, with the remainder due primarily to the political cycle. Excluding TEGNA, legacy Nexstar Media Group, Inc. generated $439 million of adjusted EBITDA. Moving to the components of free cash flow and adjusted free cash flow, first quarter CapEx was $22 million, a decrease of $13 million from $35 million in the first quarter of last year, primarily due to delayed spending given the dependency of and plans related to the TEGNA acquisition.

First quarter net interest expense was $120 million, an increase of $23 million from 2025, due primarily to $22 million of one-time commitment and funding fees associated with the temporary bridge loan in connection with the acquisition of TEGNA and the refinancing of certain TEGNA indebtedness. On a recurring cash basis, this compares to $94 million in 2026 versus $95 million in Q1 2025. First quarter operating cash taxes were $1 million, as the first quarter cash taxes are related to state taxes. Payments for capitalized software obligations, net of proceeds from disposal of assets and insurance recoveries, were $3 million both in the first quarter of this year and last.

In Q1, cash programming amortization costs were greater than cash payments by $10 million as certain programming payments were deferred. We also received an $84 million distribution from Food Network related to 2025 operating cash flows, greater than the $21 million of income from unconsolidated investments reported on our income statement. Putting this all together, consolidated first quarter 2026 adjusted free cash flow was $420 million as compared to $348 million last year. Excluding the impact of TEGNA, legacy Nexstar Media Group, Inc. generated $400 million of adjusted free cash flow. We are currently projecting CapEx in the $45 million range in Q2. Second quarter cash taxes are estimated in the $152 million range.

And from an interest perspective, our run-rate quarterly interest expense based on our current balances outstanding as of April 30 is about $187.5 million. That amount will fluctuate with SOFR rates and reduce as we repay debt. In Q2 2026, payments for programming are expected to be in excess of amortization by about $5 million. Turning now to capital allocation and our balance sheet. Together with the cash from operations generated in the quarter and cash on hand, we returned $56 million to shareholders in the form of dividends. We made no repurchases, and we used excess cash to fund the acquisition of TEGNA and repay $28 million of mandatory amortization payments on our debt.

Nexstar Media Group, Inc.'s outstanding debt at 03/31/2026 was $12.1 billion, an increase from $6.3 billion at year end, reflecting the impact of the TEGNA acquisition. Our cash balance at quarter end was $379 million, including $12 million related to The CW. Because we designated The CW as an unrestricted subsidiary, the losses associated with The CW are not accounted for in our calculation of leverage for purposes of our credit agreement.

In addition, our credit agreement allows us to include the adjusted EBITDA of TEGNA as if we had acquired the business on the first day of the period presented, to add back one-time expenses related to the deal and any operational restructuring, and to include the impact of any synergies we expect to realize within 18 months of the close of the transaction, which we continue to expect we will be able to do, just on a delayed time frame. As such, our net first lien covenant ratio at 03/31/2026 for the last eight quarters annualized was 2.94x, which is well below our first lien and only covenant of 4.75x.

Our covenant increased from 4.25x to 4.75x for this quarter and for the next three consecutive fiscal quarters after the acquisition, as permitted under our credit agreement. Our total net leverage for Nexstar Media Group, Inc. was 3.84x at quarter end, using the same calculation methodology. Subsequent to quarter end, we repaid in full our $150 million short-term Loan A and made $4 million of mandatory amortization payments. We also closed on the refinancing of our 2027 senior notes with new $1.725 billion of 7.25% senior notes due 2034.

Our Q2 2026 cash flow will be deployed first to fulfill our mandatory obligations, including debt repayment, pension and defined benefit plan contributions, our dividend, and then, optionally, repay any additional debt with excess cash flow. With that, I will open up the call for questions. Operator?

Operator: We will now open the call for questions. Your first question comes from Daniel Louis Kurnos with Stifel. Please go ahead.

Daniel Louis Kurnos: Great. Thanks. Good morning. First, Perry, I appreciate your willingness to be as open and straightforward with us on the process. First, you gave us all of the current existing pieces. Are there any other rulings, actions, or events that you foresee in the ecosystem, either from the FCC or others, that could influence the trial outside of a settlement or your appeal process? And as Lee Ann mentioned, I think you pulled back a little on CapEx. Is there any difference in day-to-day operations or focus on incremental cash preservation while this process unfolds? And then just a quick one for Lee Ann. I totally appreciate that you cannot give guidance under the circumstance.

I guess you are kind of directing us to look at what you have said publicly around 2026 and what TEGNA had put out previously as sort of the yardstick, if that is right. That would be helpful to get some clarity there. Thank you.

Perry A. Sook: I think we gave you the complete laundry list of all threatened and pending litigation that we are aware of at this time. We are not aware of anything else that is in the offing. So I think you know everything we know in terms of what is in front of us at this time. I will turn it over to Lee Ann on capital preservation and the other aspects of your question.

Lee Ann Gliha: Thanks, Daniel. On the CapEx side, we just had a little bit of delay because we had anticipated some different strategies when we combined with TEGNA. But that will all catch up over the course of the year. You can think of Nexstar Media Group, Inc. as continuing to execute on our plan, doing an excellent operational job as we normally do on a go-forward basis. We are completely dialed in and focused on executing on the Nexstar Media Group, Inc. plan. And I think TEGNA similarly is focused on executing their plan. We are not going to be providing any longer-term guidance with respect to either company at this point.

Daniel Louis Kurnos: Okay. Fair enough. Thanks, guys, and good luck.

Perry A. Sook: Thank you.

Operator: Next question, Patrick William Sholl with Barrington Research. Please go ahead.

Patrick William Sholl: Hi. Thanks for taking the questions. Just another follow-up on the M&A, or I guess the litigation. Holding the two companies separately, has that provided any sort of update on how you would want to approach operating them together in an instance if the litigation is resolved successfully?

Perry A. Sook: The hold separate order also requires that TEGNA operate within the interim operating covenants that were in place prior to the closing of the transaction. So we do have those guardrails, and we have the ability to have conversations with TEGNA. They are required and have done an excellent job of providing financial information, even in the stub period, so that we can present consolidated financials for all of the entities that we own. But other than that, I do not think there is any additional read-through in terms of how we will operate things post hold-separate order. I think that plan is pretty well baked and in place.

Lee Ann Gliha: I will just echo that. If and when we get this resolved, we will be executing on our plan as we had originally intended, subject to whatever comes out of the process of the interim.

Patrick William Sholl: And then, just in terms of the general environment, is there any sort of impact from the resolution of the tariff issue in terms of advertiser enthusiasm, or have other events offset any potential benefits on that side?

Lee Ann Gliha: Not in particular, no. We are seeing a little bit of a weaker advertising environment in the second quarter than we saw in the first quarter. I would not say there was anything in particular with respect to tariffs. I would also just remind you that we have about 60% of our advertising coming from services-based companies, which were not impacted by the tariffs.

Patrick William Sholl: Okay. Thank you.

Operator: Next question, Aaron Watts with Deutsche Bank.

Aaron Watts: Hey, everyone. Thanks for having me on. Two questions. Just a follow-up on advertising. Where are you seeing the softness amongst your large verticals as you look at Q2 and Q3? And what is the messaging from your ad partners and how they are thinking about the ad environment right now?

Lee Ann Gliha: Aaron, there is not any one category or any major categories to flag. Michael, in his comments, gave you our top and bottom categories, but there is not any major differential. What I tend to look at is our categories and which ones are increasing versus decreasing on a quarter-to-quarter basis. Last quarter, it was about 50/50. This quarter, it is about two-thirds decreasing and one-third increasing. So I think it is just a general overall weakness. I do not think we have any specific category issue. It is an across-the-board general trend.

Perry A. Sook: I would just add that we have one large home improvement advertiser that has gone silent for a period of time that is affecting our numbers. We have some pharma advertising that has not returned as of yet. And then, if the Mets were playing better, our numbers would be better on PIX and our ad sales would be better there. There are a lot of little things, but as Lee Ann said, I do not think there is any one big thing.

I will say, as I was driving to the office this morning, I drove past the gas stations that I pass every day, and for the first time there was a four-handle to the left of the decimal point in terms of the price per gallon. I think that is having some effect. My understanding is that people getting tax refunds at the lower end of the socioeconomic ladder have not flowed that money back into the economy at this point. I think people are holding on to that money longer, perhaps to see how things turn out in terms of oil prices and things like that. So I think there is just a conservatism at this moment in time.

But I do not think there is anything overarching beyond that.

Aaron Watts: That is helpful context. And if I could get one more in, a question around capital allocation and leverage. At the close of TEGNA, you agreed to sell certain stations in tandem with getting that deal approved. You set synergy targets, determined capital allocation policies, and laid out pro forma leverage goals based on the deal construct. To the extent assumptions that went into all of that were to change, whether it is required station divestitures, synergies, etc., how might capital allocation move with it? Appreciating the debt paydown you highlighted today, how important is it to you to maintain the conservative leverage profile you have historically, even if it means delaying other potential outlets for your cash?

Lee Ann Gliha: Aaron, we cannot really comment on what might be or what could be, but our track record is that we use our excess cash flow to deleverage. We do not want to be over-levered. We know the public market appreciates lower-leveraged companies. Our focus is to continue on that plan, consistent with our historical track record of deleveraging post transactions. We are still paying down debt in this environment. We paid down $150 million optionally after the end of the quarter, and I think you are going to continue to see that, especially as we flow through 2026 as a political year and have a lot of additional cash flow to achieve that.

Aaron Watts: Thank you for the time as always.

Operator: Next question, Steven Lee Cahall with Wells Fargo & Company. Please proceed.

Steven Lee Cahall: Thanks. You outlined some of the ways that you will not be able to integrate TEGNA. Can you talk about some of the things that you can do that are arm's length? I do not know if there are collaborations through Premion or digital content or news reporting, or do the terms right now really require it to be almost a beyond arm's-length subsidiary? And then, Lee Ann, just a clarification: you said you have access to TEGNA's excess free cash flow, which you can use for debt repayment.

Is that essentially their free cash flow, or are there any more limitations that get to excess free cash flow as we think about how much of their cash generation would be available for you to sweep for debt reduction? Thanks.

Lee Ann Gliha: I will take the last question first, then turn it back to Perry. I say excess free cash flow because there needs to be enough cash at the operating companies to operate. We have to continue to have an operation. So I mean, subject to minimum cash balance requirements that we have from an operating perspective. All of the debt obligations of the company are joint and several between us and TEGNA. So excess cash flow, as we see fit, will be used to repay that debt. Perry?

Perry A. Sook: Steve, there are certain commercial agreements that Michael Biard and I have been discussing that we could enter into on an arm's-length basis with TEGNA under the order, which could include and involve Premion. For example, our CW station contracted with a station in the market to produce a 10:00 p.m. news, and we sent termination notice of that during the pendency of the TEGNA acquisition. We could talk to the TEGNA station in Houston and/or our incumbent news producer to establish another commercial agreement to produce news for that station. There are some things like that we can do, and we will pursue those where they make sense during this hold-separate period.

Steven Lee Cahall: Great. Thank you.

Operator: Next question, Craig Anthony Huber with Huber Research Partners. Please go ahead.

Craig Anthony Huber: Good morning. Thank you. My first question is about the 39% ownership cap. I was very surprised that the FCC did not change the 39% ownership cap first, and then by way of that your TEGNA acquisition could have gone through, as opposed to what they did do, which was just give you a waiver. There has been some talk in the trade press about the FCC at the Commission level potentially reversing out their approval of the deal. Can you touch on that? Where are we with the 39% ownership cap? Do you think it is ever going to get done? What kind of timeline are we on?

And why did they not change that first and then do the TEGNA acquisition approval after that?

Perry A. Sook: The TEGNA acquisition was approved. We do own the assets. I want to start there, and we feel it went through a fulsome approval process at both the FCC and the DOJ — two expert agencies that regulate this industry — as opposed to the state AGs that have shown no real concern or support for local media, local journalists, local television, until this election year. I do not presuppose to be in the mind of Chairman Carr, but if you look at public statements he has made since he was a Commissioner, whether his party was in power or out of power, he has said these rules are antiquated relics of the past, and they need to go.

He is consistent in that position, I believe, to this day. I do not rule out that he will start a proceeding, perhaps this quarter or next, that would be a rulemaking to eliminate the national ownership cap. Imagine if you were Netflix or Google or Amazon and were told you could only reach 39% of the country with your business. There would be some hue and cry around that. Why should those rules apply only to broadcast? We are the only part of the media ecosystem that has a government-mandated cap on our ability to grow. Chairman Carr is totally aware of market realities, why he is taking the actions that he has taken.

I think we are still on a path to deregulation, and we are thankful that we were able to make a persuasive case to qualify for a waiver during the pendency of those proceedings. It is not as simple as putting out a press release and saying, rules have changed. There is a lot of legal work that has to go into that, a lot of wordsmithing, a lot of consultation with advisers. I would not presume that those actions are off track. There is obviously a lot going on — a lot of M&A, in addition to ours — under consideration at the FCC and the DOJ.

I think these things are moving through the pipeline, and I would not presume that they have stopped or will not move through the pipeline ultimately.

Craig Anthony Huber: I appreciate that, and I agree. But it seems like things were done backwards here — that they should have changed the 39% ownership cap first and then gone through the process to approve your deal, getting that finalized after the cap was done. They did not do that. Does that put you in a tougher position with these court cases, that you closed on a waiver as opposed to the regulation changing first and then them doing all their due diligence and approving it? What is your thought on that?

Michael Biard: Hey, Craig. I do not think, if you look at the claims that have been made in the litigation, that the order with respect to the cap would change anything. The claims being made by the plaintiffs essentially are outside the FCC's purview. They come from an antitrust perspective, which is really a different analysis entirely than the FCC. I think the FCC could have gilded a complete elimination of the rules in gold and served it up on a platter, and the plaintiffs still would have found reason to complain in this case.

Operator: Next question, Benjamin Soff with Deutsche Bank. Please go ahead.

Benjamin Soff: Good morning. Thanks for the question. I had two. First, I wanted to ask about the partnerships with ESPN and Roku. Does this represent a shift in Nexstar Media Group, Inc.'s digital strategy, and how are you thinking about balancing growing your digital business versus the opportunity to partner with other platforms? Then on divestitures, I appreciate there is a lot of uncertainty right now, but can you help us think about how a potential divestiture would impact the synergy buckets you have outlined, whether it is retrans, corporate overhead, or operational efficiencies? Thank you.

Michael Biard: I do not think it represents a shift in our thinking. With respect to the deals we struck with ESPN and Roku, we look at those as less of a shift and more of an evolution. When you look at the challenges of trying to build digital platforms in the current environment, they are enormous, and one only needs to look at the balance sheets of major media companies that have launched those digital platforms and the long history of losses associated with that. Those businesses are hard to build, capital intensive, and require a lot of ongoing maintenance. When we looked at expanding our footprint in a digital environment, we essentially had three options: build, buy, or partner.

For obvious reasons, we went with the latter, and we were able to strike deals with essentially the largest platforms available to us in each of those spaces. Particularly with respect to The CW and the sports on ESPN, where we are in the life cycle of building a sports brand, the opportunity to have our sports available and visible inside the ESPN platform, inside a dedicated CW vertical environment, will reap rewards for us not just in terms of building brand equity, but also our ability to monetize viewership on those platforms. We are extremely excited about that.

Similarly, with Roku, trying to build and really maintain a digital business in a CW-only branded environment is extremely challenging in the current landscape — you are going up against behemoths that invest literally billions of dollars every year into their platforms. Being able to tuck into the most popular AVOD platform out there, again with a CW-branded vertical environment, will deliver benefits not just in terms of near-term monetization, but long-term brand equity.

Lee Ann Gliha: On the divestiture side, Benjamin, it is premature. If you look at our synergies, there were a number of components. Obviously, retrans and in-market type synergies would have to be reduced. Corporate, maybe not so much. We would have to take a look at it. It is a little premature to think about what that impact could be.

Operator: Next question, Jason Boisvert Bazinet with Citi. Please go ahead.

Jason Boisvert Bazinet: In normal years, I have never really come across the situation where shareholders own an asset and cannot manage it. I just had a quick question. Can you elaborate on those guardrails that you talked about earlier? Second, are there any incentives that exist on the part of the TEGNA assets — for their salesforce or anything else — that minimize the risk for Nexstar Media Group, Inc. shareholders in this period where we are in limbo or suspended animation?

Perry A. Sook: If you go back to the interim operating covenants — and it is reflected in the order as well — primarily financial transactions above a certain size would have to be approved by the board of TEGNA, which is comprised of Nexstar Media Group, Inc. executives and management. That has been approved by the courts. We have the ability to appoint management inside of TEGNA. All of those things together are the governance that will guide us during this hold-separate period. They operate as a subsidiary. We can have conversations with them. The executives running the entity report to the board. We just cannot influence day-to-day decision making. But decisions beyond a certain level require board involvement and approval.

We were very comfortable in the way TEGNA was operated during the pendency of the transaction from signing to closing, and those same covenants govern our relationship with TEGNA during the hold-separate period. As to sales incentives, I am not quite sure I understood that part of the question.

Jason Boisvert Bazinet: I just get nervous about somebody at TEGNA who does not really know if they have a job, if they are going to get eliminated in some synergy number, and they get distracted and are not as focused on their core day-to-day job. Then sales numbers fall apart on the TEGNA side of the house. But I guess from your answer, the limitation is more around the integration, and there is not a lot of operational day-to-day risk Nexstar Media Group, Inc. shareholders face on the TEGNA side of the house.

Perry A. Sook: I think that is fair. If you read the judge's hold-separate order, TEGNA is not allowed to reduce headcount during the pendency of the TRO. We were comfortable in the results and performance of TEGNA during the pendency of the transaction when we were operating under the same structure that we are operating under now. Prior to closing is when anxiety is at its highest, and I would say that in the overlap markets it would have been on our side of the ledger as well. People are looking at the environment around them and at layoffs at Meta and other companies. I think everybody is likely concerned about their job, particularly if they are not doing a good job.

We track our levels of attrition and did not see any appreciable changes during the pendency of the transaction. We will continue to track attrition during this hold-separate period to determine if there are trends, but we have not seen it thus far. The TEGNA results for the first quarter were excellent. We only got the benefit of 13 days of them, but we had the financial information for the entire quarter, and they performed very well, as did Nexstar Media Group, Inc., by the results we reported this morning.

Lee Ann Gliha: I would echo that. If there was any expectation or indication that we would have a problem, you would most likely see it in that first quarter number, and TEGNA definitely had a stellar first quarter. I will now turn the floor over to Perry for closing remarks.

Perry A. Sook: Thank you, everyone, for joining us this morning. We look forward to reporting our Q2 results in early August, which will be our first full quarter of results reporting the combined consolidated results of the new Nexstar Media Group, Inc. Have a great rest of your day.

Operator: This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.

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