Nexstar (NXST) Q4 2025 Earnings Call Transcript

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Date

Thursday, February 26, 2026 at 10 a.m. ET

Call participants

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

Takeaways

• Net revenue -- $1.29 billion, down 13.4%, reflecting reduced political advertising and partially offset by growth in non-political advertising.
• Distribution revenue -- $720 million, up 0.8%, driven by higher rates, vMVPD subscriber growth, and additional CW affiliations, partially offset by MVPD subscriber decline.
• Advertising revenue -- $549 million, down 27.6%, including a $233 million drop in political advertising to $21 million.
• Non-political advertising -- Up 4.5%, ahead of company expectations for low single-digit decline, with broad-based improvement across local, national, network, and digital segments.
• The CW viewership -- Up 19%, ranking as the tenth most-watched ad-supported network and the second fastest-growing; cash flow improved 32%.
• NewsNation performance -- Achieved highest total day, primetime, and daytime viewership ever; recognized as fastest-growing cable news network in the adult 25%-54% category.
• Expense management -- Recurring cash operating expenses reduced by 1.6%, attributed to operational restructuring and programming cost rationalization at The CW.
• Adjusted EBITDA -- $433 million with a margin of 33.6%, falling $195 million from the previous year.
• Adjusted free cash flow -- $214 million, down from $411 million last year.
• Capital allocation -- $56 million returned to shareholders in the quarter via dividends; $351 million returned in the year, split between $226 million in dividends and $125 million in share repurchases, reducing shares outstanding by 1% to 30.3 million.
• Long-term debt -- $6.3 billion at year-end, down $26 million versus prior quarter.
• Cash balance -- $280 million at year-end, including $13 million at The CW.
• First-lien covenant ratio -- 1.71x, below the 4.25x covenant threshold.
• Total net leverage -- 3.09x as of year-end.
• 2026 guidance: Adjusted EBITDA -- Stand-alone projection of $1.95 billion-$2.05 billion.
• 2026 guidance: Distribution revenue growth -- Projected low single-digit growth gross, and mid-single-digit growth net.
• 2026 CapEx -- Forecast at $125 million-$130 million for the year, and $30 million-$35 million in the first quarter.
• 2026 interest expense -- Projected $355 million-$365 million, an $11 million improvement at midpoint versus the previous year.
• 2026 cash taxes -- Estimated at $315 million-$325 million, up $28 million from 2025.
• TEGNA acquisition progress -- HSR filings and FCC license applications are submitted; all regulatory and legal inquiries addressed, with closure targeted by end of 2026.
• Political advertising opportunity -- Industry-wide 2025–2026 cycle projected at $10.8 billion, with nearly 50% to broadcast; Nexstar Media Group expects low double-digit share of total broadcast spend, with presence in over 80% of contested election markets.
• Digital revenue -- Grew high single digits overall and double digits locally; expected to surpass national advertising revenue in 2026.
• Expense priorities for 2026 -- Focus on digital optimization and further expense rationalization, including technology integration and centralization to drive additional operating cost reductions.
• Programmatic advertising initiatives -- Premion platform from TEGNA (NYSE:TGNA) expected to provide new opportunities in programmatic digital sales when integrated; ongoing efforts to automate and streamline programmatic buying of linear inventory.
• AI utilization -- Deployed across newsrooms for workflow efficiency and multi-platform optimization, with additional applications in sales prospecting and operations under development.
• Alternative spectrum use -- Joint venture (EdgeBeam Wireless) established with other broadcasters to explore high-speed data transmission, with early-stage customer activity underway.
• Dividend policy -- 2026 dividend projected at $228 million and maintained at 2025 levels; current yield is 3.2%, positioning in the 73rd percentile among S&P 400 dividend payers.

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Risks

• Fourth quarter advertising revenue fell 27.6%, with political advertising dropping $233 million to $21 million, materially impacting top-line performance.
• Adjusted free cash flow declined to $214 million from $411 million, reflecting lower earnings and investment needs.
• Potential for additional, unspecified "displacement impact on non-political advertising in the back half of the year" as political spend increases, per management's guidance.
• Income from equity method investments, mainly TV Food Network, fell 67% and included a write-down of that investment.

Summary

Nexstar Media Group (NASDAQ:NXST) executed major renewals and extended critical network affiliations, while regulatory filings for the pending TEGNA (NYSE:TGNA) acquisition progressed as planned. Management reports digital revenue is set to surpass national advertising revenue this year, driven by local digital strength and new advertiser solutions. The CW and NewsNation posted record viewership gains, validating strategic emphasis on live news and sports programming, with The CW advancing toward profitability by year-end. 2026 adjusted EBITDA is forecast at $1.95 billion-$2.05 billion, supported by distribution and digital growth, stringent cost controls, and expected high political advertising spend. Capital allocation remains conservative, prioritizing the TEGNA acquisition and steady dividends, with the balance sheet showing reduced leverage and adequate liquidity.

• Regulatory actions for TEGNA, including HSR and FCC processes, are on schedule with all related inquiries addressed; closing is expected by year-end, pending agency decisions.
• Company leadership signaled no anticipated surprises or material divestitures from the TEGNA deal, and expects synergy upside—especially in digital and political markets—upon integration.
• Programmatic and AI initiatives are positioned to streamline advertising operations and expand market reach, aiming for a unified, frictionless buy-sell ad process post-acquisition.
• Top advertising categories showing growth were gaming, banking, attorneys, and sports betting, with digital initiatives mitigating auto advertising declines.
• "first-lien covenant ratio for Nexstar Media Group, Inc. as of Dec. 31, 2025 for the last eight quarters annualized was 1.71 times, which is well below our first-lien and only covenant of 4.25 times."

Industry glossary

• vMVPD: Virtual Multichannel Video Programming Distributor, offering television programming via internet streaming rather than traditional cable or satellite.
• MVPD: Multichannel Video Programming Distributor, traditional cable or satellite service providers offering multiple television channels.
• HSR filings: Hart-Scott-Rodino Act pre-merger notification submissions required for large mergers, reviewed by antitrust regulators.
• Premion: TEGNA-owned platform specializing in programmatic buying of connected TV (CTV) ad inventory.
• EdgeBeam Wireless: Joint venture established by Nexstar Media Group and other broadcasters to leverage television broadcast spectrum for wireless data services.

Full Conference Call Transcript

Perry A. Sook: Thank you, Joseph, and good morning, everyone. Thank you for joining us today. Michael Biard, our Chief Operating Officer, and Lee Ann Gliha, our Chief Financial Officer, are with me on the call as always. Nexstar Media Group, Inc.'s fourth quarter financial results capped a year marked by strong execution and bold strategic action to shape the future of the business. We delivered on all key operational priorities in 2025, including successfully reviewing and renewing distribution agreements representing over 60% of our subscriber base, further elevating The CW and NewsNation to top-tier networks, extending our affiliation agreements with both ABC and MyNetworkTV, and pursuing regulatory reform through our landmark agreement to acquire TEGNA.

These achievements, together with the return of midterm election political advertising in 2026, set the stage for a very exciting year of growth ahead for Nexstar Media Group, Inc., as reflected in our stand-alone Nexstar Media Group, Inc. pre-TEGNA full-year adjusted EBITDA guidance of $1,950,000,000 to $2,050,000,000. The rationale for the Nexstar Media Group, Inc.–TEGNA combination is becoming increasingly clear. Consolidation is accelerating across the broader media industry, from the Hulu-Fubo transaction to the proposed Charter merger to the upcoming sale of Warner Bros. Discovery.

Against this backdrop, our transaction represents a pivotal and critical opportunity to establish a framework for local television broadcasters to more effectively compete with big tech and with big media while strengthening our ability to deliver high-quality local journalism to our communities. I am pleased to report that we remain on track and are making great progress on our path to closing. Our HSR filings and our FCC license transfer applications have all been submitted. We have responded to all inquiries from the DOJ, the FCC, and the state attorneys general, and we continue to work with all regulatory and legal bodies to fulfill any remaining requests.

Our expectation for close is by the end of 2026 and that remains unchanged. If we look at recent industry strategic activity, broadcast has been a consistently coveted asset because of the scale, reach, and results it delivers to premium programming, especially sports. The numbers speak for themselves. This past season, the NFL delivered its highest viewership in sixteen seasons, up 7% year over year, largely driven by broadcast. In home and away markets, broadcast still delivers the majority of the NFL Thursday Night Football audience versus Amazon Prime.

The NBA's return to broadcast fueled a percent year-over-year increase in regular season viewership through mid-February, and that marks the highest average NBA audience at this point in the season since 2018. The NBA All-Star Game also benefited with the highest ratings in fifteen years in its first year back on NBC. And finally, the Winter Olympics also delivered their strongest viewership in years. The data is clear: when it comes to delivering scaled audiences for premium live sports and events, broadcast remains unmatched. In this regard, Nexstar Media Group, Inc.'s own sports-focused programming strategy is delivering excellent results and enabled The CW to exceed our financial expectations in 2025.

The CW finished the year as the tenth most-watched ad-supported network and the second fastest-growing network overall, delivering a 19% year-over-year increase in viewership. In 2025, we improved the network's cash flow by an impressive 32%, and we anticipate continued financial improvement for the network as we move through 2026, with profitability expected by the fourth quarter of this year. The continued success of our long-term strategic focus on high-impact news and sports programming is further validated by the performance of NewsNation, which posted its strongest year ever in total day, primetime, and daytime viewership and, in 2025, was the fastest-growing cable news network in the adult 25–54 demographic.

Consumer awareness of NewsNation has increased to over 40%, its highest level to date, with over 50% awareness among viewers of news. These results reflect the fact that NewsNation's programming and unique fact-based reporting are resonating with viewers looking for a balanced and impartial take on the news. Looking ahead, as we had anticipated and discussed on prior calls, we are beginning to see more stable subscriber trends. Smaller DTC platforms are being integrated into multichannel pay-TV packages, and distributors continue to launch new value-priced skinny bundles, many focusing on broadcast and news programming. In Q4, Charter posted sequential quarterly growth in video subscribers, and overall, the data is encouraging to Nexstar Media Group, Inc.'s distribution outlook.

While we are focused on closing our proposed acquisition of TEGNA, we remain equally disciplined in executing against Nexstar Media Group, Inc.'s core business. Beyond maximizing the political advertising presented by the midterm elections, our top two priorities in 2026 are digital optimization and expense rationalization. Digital is a key growth engine, and we continue to expand our audience reach, including local CTV apps now live in 108 markets, and broaden advertiser solutions across our owned and third-party inventory.

Despite AI search headwinds, digital revenue grew high single digits in 2025 and double digits in our local business, and in 2026, we expect digital revenue to surpass our national advertising revenue, an important milestone that strengthens our long-term non-political advertising trajectory. At the same time, we are further streamlining and centralizing our operations, automating select production functions, and aligning incentive compensation closely with performance—actions which we expect will drive additional operating expense reductions and enhanced execution across the company. Touching briefly on political ad impact, projections are about $10,800,000,000 in total political advertising for the 2025–2026 election cycle, a record amount for the midterms, with broadcasting expected to capture nearly 50% of that total, or about $5,280,000,000.

We expect to capture a low double-digit share of total broadcast political advertising spend for the current cycle, as our positioning remains excellent with a presence in more than 80% of the contested election markets. In summary, our assets generate consistently strong free cash flow, which we have used to create the clean balance sheet that we have today, to return capital to shareholders, and to pursue highly accretive M&A like TEGNA, executed with our proven playbook and grounded in our steadfast commitment to localism.

We are energized by the significant prospects before us, and we remain laser-focused on executing our 2026 objectives, including closing our acquisition of TEGNA, capitalizing on the midterm election political advertising opportunity, and continuing to optimize our business operations, all of which we anticipate will contribute to shareholder value creation. I will now turn the call over to Michael Biard. Michael?

Michael Biard: Nexstar Media Group, Inc. delivered fourth quarter net revenue of $1,290,000,000, a decline of 13.4% compared to the prior year, primarily reflecting the year-over-year reduction in political advertising, offset by better-than-expected growth in non-political advertising revenues. Fourth quarter distribution revenue of $720,000,000 increased $6,000,000, or 0.8%, compared to the prior-year quarter and primarily reflects increased rates, growth in vMVPD subscribers, and the addition of CW affiliations on certain of our stations, offset in part by MVPD subscriber attrition. In 2025, we renewed distribution agreements covering more than 60% of our subscribers, extended our network affiliation agreements with ABC and MyNetworkTV to 2027, and renegotiated affiliation and vMVPD agreements for The CW covering about two-thirds of its subscribers.

Looking ahead, we have approximately 30% of subscribers up for renewal this year. In 2026, on a stand-alone Nexstar Media Group, Inc.-only basis, we are projecting distribution revenue growth to be in the low single digits on a gross basis and in the mid-single digits on a net basis for the full year. Our projections are based on our current and expected contract terms and an improvement in the rate of subscriber attrition. Turning back to our results for Q4 2025, advertising revenue of $549,000,000 decreased $209,000,000, or 27.6%, over the comparable prior year, primarily reflecting a $233,000,000 year-over-year decrease in political advertising to $21,000,000.

However, non-political advertising was up 4.5% in the quarter, better than the expectation of a low single-digit decrease we mentioned in our last earnings call. We saw later-than-anticipated spending last quarter, driving broad-based improvement across all advertising segments, including local, national, network, and digital. Top advertising categories in the quarter were gaming, banking, attorneys, and sports betting, driven by the legalization of online sports betting in Missouri. Auto was once again our largest declining category, but our focus on developing new digital advertising products with auto dealers partially offset that decline.

For the first quarter, non-political advertising is currently forecast to be flattish on a year-over-year basis, primarily due to the negative relative impact of the Super Bowl airing on NBC this year compared to Fox last year, where we have a stronger footprint. However, this negative comparison will be partially offset by the incremental advertising from the Winter Olympics on NBC. So far this year, we have seen strong viewership and advertiser demand for marquee sports content, with more than a 20% increase in advertising for the 2026 Super Bowl and Milan–Cortina Olympics compared to the comparable 2022 Super Bowl and Beijing Olympics.

On the political side, we generated approximately $21,000,000 in political advertising revenue during the quarter, primarily driven by Virginia's statewide general election and spending on California's redistricting ballot proposition and early governor's race spending. With the return of the midterm election cycle in 2026, we look forward to once again demonstrating the value of broadcast television to candidates and campaigns looking to communicate to the electorate through political advertising on television. As Perry mentioned, we expect to generate a low double-digit percentage of total broadcast political advertising for the year. As a reminder, industry advertising forecasts are provided on a gross basis and Nexstar Media Group, Inc. reports advertising revenue, including political, net of agency commissions.

As in previous election years, we expect roughly 20% of our full-year political advertising revenue to be earned in the first half of 2026, with the remaining 80% in the second half. Political advertising is also expected to impact non-political advertising, driving displacement in the back half of the year. On the expense side, we remain focused on continuously improving the operational efficiency of our business, and in 2025, we reduced recurring cash operating expenses by 1.6% as a result of the operational restructuring we implemented in Q4 2024 and Q1 2025 and continued rationalization of programming costs at The CW.

Looking ahead, as Perry mentioned, you can expect us to deliver additional cash operating expense savings across the business in 2026. Turning to The CW, audiences are consistently showing up for our live sports lineup, and that momentum is translating into progress toward our financial targets. With its debut on CW Sports, the NASCAR O'Reilly Auto Parts Series, formerly the Xfinity Series, delivered its most-watched season in four years, up 10% year over year, averaging over 1,000,000 viewers across 33 races. College football also posted double-digit gains, averaging 456,000 viewers per week, with ACC matchups on The CW up 26%.

ACC men's and women's basketball is also off to a strong start this season, with total viewers up 35% through the first 10 games. And NASCAR on The CW has returned strong: the O'Reilly Auto Parts Series season opener at Daytona delivered 2,300,000 peak viewers, including more viewers in the 18–49 demo for any edition of this race since 2018. The momentum continued last week in Atlanta, where we delivered 1,400,000 average viewers, representing the best performance for this race since 2016. With 100 additional hours of sports programming expected in 2026, nearly 47% of The CW schedule will be sports or sports-adjacent.

At the same time, we are strengthening our primetime lineup with premium entertainment, including Wild Cards, the final season of All American, Police 24/7, and refreshed game shows Scrabble hosted by Craig Ferguson, and Trivial Pursuit, which will air not only on The CW but will also be licensed for syndication downstream. Our overall programming strategy is delivering results, with The CW outperforming Big Four primetime telecasts 273 times across total viewers and key demos in the 2024–2025 season. That is up from just 45 times a year ago. Similarly, NewsNation continues to hit consistent ratings milestones. In 2025, NewsNation remained the number one fastest-growing cable news network in the 25–54 demo.

For the year, NewsNation surpassed MSNBC 60 times and CNN 40 times in head-to-head telecasts across total viewers in the 25–54 and 35–64 demos. This compares to the 2024 period when NewsNation surpassed MSNBC four times and CNN two times in head-to-head telecasts. To close, I want to reiterate our confidence in our long-term outlook and the enduring strength of Nexstar Media Group, Inc.'s business model. Our programming strategy, anchored by live news and sports, continues to deliver results for The CW and NewsNation, and we remain committed to unlocking even greater value from these assets as our audiences grow.

Our local programming strategy is similarly anchored by our unrivaled live news product, and the proposed TEGNA acquisition will create substantial and immediate value for shareholders while advancing the public interest by strengthening local broadcast journalism and providing an expanded range of competitive broadcast and digital advertising solutions across our portfolio of local and national assets. I will now turn the call over to Lee Ann for the remainder of the financial review. Lee Ann?

Lee Ann Gliha: Thank you, Michael, and good morning, everyone. Michael gave you most of the details on the revenue side and on The CW, so I will provide a review of expenses, adjusted EBITDA, and adjusted free cash flow, along with a review of our capital allocation activities and our 2026 guidance. Combined fourth quarter direct operating and SG&A expenses, excluding depreciation and amortization and corporate expenses, decreased by $7,000,000, or 0.9%, driven primarily by reduced commissions from sales and political advertising revenue in Q4 2025, reduced news and production expenses, reduced promotions from our operational restructuring initiatives, and lower administrative and one-time expense.

Q4 2025 total corporate expense was $65,000,000, including non-cash compensation expense of $20,000,000, compared to $48,000,000, including non-cash compensation expense of $20,000,000, in the fourth quarter 2024. The increase of $17,000,000 is primarily due to one-time costs associated with our proposed acquisition of TEGNA and the impact of a reduction in the bonus reserve in Q4 2024 that was larger than in Q4 2025. Q4 2025 amortization of broadcast rights, included in our definition of adjusted EBITDA, was $75,000,000, a reduction of $23,000,000 from $98,000,000 in Q4 2024, primarily due to timing of programming at The CW.

Q4 2025 income from equity method investments, which primarily reflects our 31% ownership in TV Food Network reduced by amortization of basis difference, declined by $12,000,000 in the quarter, or 67%, primarily related to TV Food Network's lower revenue. We also wrote down our investment in TV Food Network consistent with other companies in the entertainment cable network space. Putting it all together, on a consolidated basis, fourth quarter adjusted EBITDA was $433,000,000, representing a 33.6% margin and a decrease of $195,000,000 from the fourth quarter 2024 of $628,000,000.

Moving to the components of free cash flow and adjusted free cash flow, fourth quarter CapEx was $54,000,000, an increase of $19,000,000 from $3,035,000,000 in the fourth quarter last year, primarily due to an investment in real estate at one of our properties. Fourth quarter net interest expense was $91,000,000, a reduction of $13,000,000 from 2024. On a cash basis, this compares to $89,000,000 in Q4 2025 versus $101,000,000 in Q4 2024. The reduction in interest expense was primarily related to a reduction in SOFR and reduced debt balances. Fourth quarter operating cash taxes were $33,000,000 compared to $67,000,000 in 2024, a decrease of $34,000,000, primarily related to decreased pre-tax operating income in 2025 related to decreased non-election political advertising.

Payments for capitalized software obligations, net of proceeds from disposal of assets and insurance recoveries, were $6,000,000 versus $4,000,000 last year. In Q4, cash programming amortization costs were greater than cash payments by $19,000,000 versus lower by $13,000,000 in 2024, as certain programming payments were prepaid. Pulling this all together, consolidated fourth quarter 2025 adjusted free cash flow was $214,000,000 as compared to $411,000,000 last year. Now turning to our 2026 guidance, we believe Nexstar Media Group, Inc. stand-alone 2026 adjusted EBITDA will be in the range of $1,950,000,000 to $2,050,000,000.

Perry and Michael already provided some of the key assumptions that are embedded in that guidance, including: one, our expectation for growth in gross and net distribution revenue to be up low and mid-single digits, respectively, based on contract renewals completed in 2025 and expected in 2026 and an improvement in subscriber attrition trends; two, political advertising revenue should be in an amount equal to a low double-digit market share of broadcast political advertising and will have a displacement impact on non-political advertising in the back half of the year; three, total operating and corporate expenses and amortization of broadcast rights, excluding one-time charges, will again decline year over year due to our continued plans to affect our business focusing on efficiencies and reducing programming costs; and four, we expect The CW will continue to reduce its loss by another 30% in 2026 from 2025 levels and achieve profitability in the fourth quarter.

Key factors differing from our current expectations which could affect our outlook for adjusted EBITDA for 2026, either positively or negatively, include, among other things, the rate of growth or attrition of pay-TV subscribers, the health of the local and national advertising markets, our renegotiation of certain distribution and affiliation agreements on terms favorable to the company, and the attributable net income related to our 31.3% ownership stake in TV Food Network. We do not intend to update this guidance on a quarterly basis. As a few additional points of guidance with respect to free cash flow, we are currently projecting CapEx of $125,000,000 to $130,000,000 for the year, and $30,000,000 to $35,000,000 in the first quarter.

Based on the current yield curve, we anticipate full-year 2026 interest expense to be in the $355,000,000 to $365,000,000 area, an improvement of $11,000,000 versus 2025 levels at the midpoint. We project Nexstar Media Group, Inc.'s cash interest expense, including the spread on our floating-rate debt instruments, the current SOFR forward curve, and the coupons on our fixed-rate debt, along with our expectations for debt repayments, which includes our mandatory amortization of approximately $111,000,000. Q1 interest expense is expected in the $85,000,000 range. Full-year 2026 cash taxes are expected to be approximately $315,000,000 to $325,000,000, an increase versus 2025 of $28,000,000 due to an expected improved income, primarily the result of the election year.

For cash taxes, we use a 26% tax rate when calculating our estimated tax before one-time and other adjustments. The first quarter includes only a very small amount of state income tax in the $2,600,000 range. As a reminder, we will use the annualization method for tax, meaning tax related to 2026 will be largely deferred to 2027. In 2026, payments for programming are expected to be in excess of amortization by $25,000,000 to $30,000,000 due primarily to an investment in programming for future years, approximately $1,000,000 of that in the first quarter.

Turning to capital allocation and our balance sheet, together with cash from operations generated in the quarter and cash on hand, we returned $56,000,000 to shareholders, comprised entirely of dividends, as we are conserving cash for the acquisition of TEGNA. For the year, we returned $351,000,000, or 42% of our free cash flow, to shareholders in the form of $226,000,000 of dividends and $125,000,000 of share repurchases, reducing our year-end shares outstanding by 1% to 30,300,000. Nexstar Media Group, Inc.'s outstanding debt at 12/31/2025 was $6,300,000,000, a reduction of $26,000,000 for the quarter as we made quarterly amortization payments. Our cash balance at quarter end was $280,000,000, including $13,000,000 of cash 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. As such, our first-lien covenant ratio for Nexstar Media Group, Inc. as of 12/31/2025 for the last eight quarters annualized was 1.71 times, which is well below our first-lien and only covenant of 4.25 times. Our total net leverage for Nexstar Media Group, Inc. was 3.09 times at quarter end.

Our 2026 cash flow will be deployed to fulfill our mandatory obligations, including debt repayments of $111,000,000 and $36,000,000 of pension and defined benefit plan contributions, the anticipated 2026 dividend of approximately $228,000,000, and to build cash balances to fund the acquisition of TEGNA. In January, we announced our dividend, maintaining the same level as 2025, as excess cash will be used to fund the acquisition of TEGNA. Based on our stock price as of yesterday, our dividend represents a 3.2% yield, which puts us in the 73rd percentile of all dividend-paying stocks in the S&P 400 for dividend yield. With that, I will open up the call for questions. Operator, can you go to our first question?

Operator: Thank you. We will now open for questions and begin the question-and-answer session. If you are in the question queue, you may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. We will go on to our first question. We will hear from Daniel Louis Kurnos with Benchmark.

Daniel Louis Kurnos: Great. Thanks. Good morning. I appreciate all the color as usual. Perry, as you might imagine, given the presidential tweet recently, I think investor anxiety around when we might get an FCC cap elimination has increased a little bit. So any color you can give us around wording, timing, and how that process might play out would be helpful. And then separately on the expense side, all of you were really super helpful to walk through the pieces.

Since you called out digital optimization and expense rationalization as your two priorities, given all of the AI tools that are out there—what we are hearing from peers and the broader tech landscape—how much of that is embedded in the guide you have given this year? How much is applicable on, say, content cost reduction for things like The CW or NewsNation? Any way you can help us frame up the opportunity set you see there to continue this expense reduction momentum would be helpful. Thank you.

Perry A. Sook: Dan, I will take the first part. I would hope to not characterize investor anxiety around the elimination of the cap and approval of our deal. I would hope that anxiety would turn into enthusiasm. We certainly appreciate the support of the president vis-à-vis his tweet and follow-on comments by the Chairman of the FCC and his support for the deal. As to timing, that is really the purview of the regulatory agencies. We are working very, very diligently to complete all of the information requests. As things go, the FCC shot clock would technically expire on June 1 of this year. We remain consistent in our belief that the transaction will close before the end of the second quarter.

We are hopeful that we can close sooner than that, but we obviously continue to engage with the regulatory agencies to try and get to the desired result, not only on the national ownership cap, but the approval of our transaction.

Lee Ann Gliha: On your questions about digital and expense, I will take digital first. Nexstar Media Group, Inc. has a tremendous local sales force. We have over 1,500 sales folks across the country and relationships with over 50,000 advertisers. Our advertisers really value our television product, but they also value our apps and our websites. They are also increasingly looking for audience opportunities, and because we have those great local relationships, we are able to sell more and sell to a broader audience—not just including our local television audience, but if somebody wants more entertainment or they want different demographics, we can sell that and add that onto the portfolio.

We have had good success with that, especially on our local side, and that has really been driving the growth. As Perry mentioned, this will be a good year for us because we do expect our digital revenue to eclipse our national television advertising revenue. Digital has a different trajectory, which should actually really help our longer-term growth with respect to net revenue. On the expense side, we are continuing to look at the business in ways to optimize the operation. Are there ways that we can do things in a different way that is more centralized, or to use new technologies to help create efficiencies in our local operations and even more centrally?

We are continuing to reimagine that, and that is one of the benefits we have because of the scale of our business. We have a good opportunity to be able to do some of those things. You saw it in our 2025 results, and you will see it again in our 2026 results.

Operator: Thank you. Our next question, we will hear from Benjamin Soff with Deutsche Bank.

Benjamin Soff: Good morning. Thanks for the question. Another one on the regulatory side. Now that you are a bit deeper into that process, have there been any surprises so far in your conversations with regulators? In particular, do you have a sense for how the DOJ might plan to view in-market consolidation, and what could that mean in terms of requiring any divestitures or not? And then I am curious what you are seeing as far as the macro environment so far in 2026 as it relates to advertising. Thank you.

Perry A. Sook: Sure. As it relates to the regulatory process, we continue to engage vigorously with the DOJ, and I think we have provided some excellent material to them regarding the definition of market—or redefinition of video—which is where we really compete. Obviously, they have yet to render a decision, so we will defer to their judgment. But I think that the information we provided has been strong, and we are laser-focused on that. We feel very good about where we are, the dialogue we have had, the progress we have made, and the endorsements that we have received. As to transaction particulars, we are just not there yet in terms of those expectations.

But as we have reported historically, we expect that if there are any divestitures, they would be de minimis to the overall value of the deal.

Lee Ann Gliha: On the overall macro environment, I think we are feeling decent about it. One of the things that we like to track within our overall advertising categories is what percentage of the categories are increasing versus decreasing in terms of revenue growth. We are seeing in the first quarter versus the fourth quarter a greater percentage that are increasing than we saw in the fourth quarter. We had some guidance here of flattish non-political advertising in the first quarter, so we are feeling decent about the macro outlook.

Operator: Our next question, we will move to Aaron Watts with Deutsche Bank.

Aaron Watts: Hi, everyone. Thanks for having me on. Just two questions. Lee Ann, maybe one for you to start. Based on your performance to close out 2025 and view into 2026, any change in your outlook for pro forma leverage once you close the TEGNA deal? And then secondly, for me on the advertising side, Perry, this question is a bit of an offshoot of when I asked you at the time you announced the TEGNA deal. The programmatic buying marketplace continues to grow and gain influence. How do you see that impacting your ad sales overall over the near-term horizon? And how are you currently participating or planning to participate in that with your ad inventory?

Lee Ann Gliha: Not really. No.

Perry A. Sook: Sure. In terms of programmatic digital advertising, part of the acquisition of TEGNA will include the acquisition of Premion, which is their platform for programmatic digital advertising. We think there is real opportunity there to overlay that technology and that sales force with our stations, which currently are not on the Premion platform. That is an upside in operating the business. I would not necessarily characterize it as a synergy, but we think that will prove out as time goes on. As to programmatic on linear, we already are in that business to a certain extent with companies like ITN and Cadent, who basically are doing a very manual version of programmatic in linear.

We are working internally and with external partners to develop a programmatic linear solution that we are in the early stages of trying to develop with other partners. We need to reduce the frictional cost of buying linear inventory, and technology is a way to do that. We would like to get to the point where we have a single seamless system from pitch to pay regardless of where the impressions are located that you are attempting to access. That is my vision and where I would like us to get to. When people ask me what we are going to do on day two of the TEGNA acquisition closing, it is to work on that project.

Work has started already, we have a task force together, and I am doing another update here in a couple of weeks. We intend to try and get that right. As one of the largest purveyors of advertising in the world—we were ranked by one analyst as the eighteenth largest purveyor of advertising in the world—we have a lot to gain by getting that right and removing the frictional costs of buying linear television, trying to make it more akin to the buy-sell process of digital inventory.

At the end of the day, it should be one set of inventory, one process, seamless from pitch to pay, and that is the gold standard that we are going to try and work to achieve.

Operator: And next, we will move to Patrick William Sholl with Barrington Research.

Patrick William Sholl: Hi. Thanks for taking the question. Maybe just a quick follow-up on advertising. Can you provide just a little bit more detail on some of the categories that were increasing or decreasing and, as we start to lap the initial tariff headwinds, if you are seeing any greater enthusiasm from the Supreme Court ruling?

Lee Ann Gliha: With respect to the categories, auto was our biggest decliner, but not by any sort of outstanding amount. We did see the rate of decline being offset within that category by good growth on the digital side, and we are seeing a pretty nice improvement in that auto trend into the first quarter, so we are feeling good about that. With respect to the other top categories, we had gaming and sports betting that was a great category in the fourth quarter. That was mostly due to the Missouri legalization. Anything other than that—even on the downside—nothing really was distinguished.

I mentioned earlier that we did see more categories increasing than decreasing overall, and we are seeing that trend continue into the first quarter and be even a little bit better in the first quarter. Things are looking okay, I would say. There is nothing really to read into the various categories—no outliers that are driving the outcome one way or the other. With respect to the tariffs, I do not know that we have seen anything in particular there.

I would remind you one of the points that we always like to make is about 60% of our advertising revenue comes from services categories versus goods categories, so we do have a bit of a natural hedge there because we are much more service-focused than goods-focused. I would not say that there has been anything that people have been talking about with respect to tariffs as of yet, but we will keep you posted.

Operator: And next we will go on to Craig Anthony Huber with Huber Research Partners.

Craig Anthony Huber: Great. Thank you. I have a broad question here. The uses of AI in your operations—can you give us some examples of things that are moving the needle that you are excited about that AI is helping you with, whether it be on the cost-savings front or enhancing your product to speed up things? Some examples there would be helpful first. Thank you.

Michael Biard: Sure, Craig. I will take that. We have deployed some AI tools across the organization inside our local newsrooms to help us on the workflow front—make the process a little bit more efficient—and allow us to take a story and optimize it for multi-platform, for instance. It allows us to efficiently find sources of information and leads across multiple places all at one time. Looking forward, we are in the middle of deploying some AI for our sales team that we expect will help both with prospecting, sales development, and workflow and operations in that front as well.

Early days yet, but we are optimistic about some of the potential that is out there as that technology starts to flow down into our industry.

Craig Anthony Huber: I also want to ask for an update on alternative uses of spectrum. Maybe just update us on what has happened in the last year and what the plans are this coming year. I know it is a long way out to be meaningful for your company and your peers, but an update on alternative uses of spectrum, please.

Michael Biard: Sure. To underscore what you said, it is a long way out before it is meaningful for us or our peers. In the last year, as you know, we formed a joint venture with three of our fellow broadcasters, EdgeBeam Wireless. That organization is at the early stages of formulating its management team and its go-to-market strategy. I think you will see them in the coming year be in the market with products. They are out there right now talking with customers. Early days, but we are starting to see some early orders flow—some of that is proof of concept, some of it is actual revenue.

We are optimistic that the business will take off and really demonstrate to the market the unique benefits of broadcast spectrum for high-speed data transmission.

Operator: And Steven Lee Cahall with Wells Fargo will have our next question.

Steven Lee Cahall: Thank you, and I joined a little late. I apologize if I ask anything that causes you to repeat yourself. On the regulatory process around TEGNA, the press has had a lot of information about the direction of the FCC. I think that one seems increasingly clear, at least as to the conclusion we are going to get. The DOJ is a little more of a black box, and I think the initial read is you expect minimal divestitures.

I was wondering if you could give us the latest and greatest on what your perception is as to how the DOJ is now looking at markets and what sort of a precedent this transaction could be for the future of how the DOJ looks at broadcast ownership within markets. Then also, just a question on synergies. TEGNA has some good digital advertising businesses. I am guessing that scale helps in political cycles. I do not think any of those benefits are in your synergy guidance.

Do you have any experience with these from deals like Tribune or even The CW that you could share in terms of where there could be some opportunities for one plus one equals more than two in some of those revenues over time? Thank you.

Perry A. Sook: Steven, on the regulatory front, as I said earlier, we have provided reams of information to DOJ and studies from economists that we have hired that talk about the definition of the marketplace and the need for a redefinition of video, which is where we compete. We have provided that information, but at this point, we have not had any definitive feedback as to how they are interpreting that information. As to the topic of divestitures, we have had no conversation about divestitures at all at this point in the process.

That is not to say that it will not come up later in the process, but we continue to maintain that if there were divestitures, it would be a minimal percentage and not meaningful to the deal. The DOJ is meant to be a black box—disclosures there are not required to be public. I have read the information that we provided and the economic studies that I think are highly credible and very convincing. It is up to the folks at the DOJ—and there has been some change in personnel there, so other folks are getting up to speed—and it is up to the DOJ and to the FCC to render their opinion and ultimately to come to a decision.

We feel very good about the work that has been done, the information that has been provided, the endorsements we have had, and the stage at which we are in the process. We are very confident that we will get to a finish line in the time frame that we outlined.

Lee Ann Gliha: On the synergies, I would just say, Steven, on the digital side, as Perry mentioned earlier, TEGNA has this business, Premion, which is focused on the CTV end market, which we know is growing very nicely. We are excited about the opportunity to bring our stations to bear in that market in a bigger way. You are correct—we have not put any revenue synergies other than the retrans synergies that we have talked about previously into our synergy number. With respect to political, as you know, that all comes down to what market it is, where there is a contested election, and where the dollars need to go.

One of the things that we thought was going to be beneficial about this transaction is that it gives us more exposure to some of those political markets. We have a presence in Georgia, but we did not have a presence in Atlanta. They have some great stations in Maine that are in a contested election market. They have a station in Toledo, Ohio, which could also be a good political market for us. Phoenix, Arizona is the other one where they have a larger station than we do there. All of those things should accrue to the political picture going forward, and we are optimistic on getting this deal closed in advance of the cycle this year.

Operator: And next, we will hear from Jason Boisvert Bazinet with Citi.

Jason Boisvert Bazinet: Okay, at risk of showing my own ignorance, I am going to ask this question. I think you said on the call that you think that digital ads will exceed your national ad revenues. I think the last time you disclosed digital ad revenues, it was around $400,000,000, and I sort of think of your national ad revenues as being at The CW network and would have said it is already bigger than your national ad. What am I missing?

Lee Ann Gliha: I think all you are missing is that The CW is national advertising, but it is a subsegment of that—network national advertising. We also have national advertising at our stations, which are national buyers that then look to place their ads in local markets. That is the other piece that we refer to as national.

Jason Boisvert Bazinet: I see. Thank you.

Operator: Thank you. That will conclude the question-and-answer session. I would now like to turn the floor back to Perry Sook for closing remarks.

Perry A. Sook: Thank you, Operator. I appreciate everyone joining us today, and we are very pleased with the results that we were able to post for 2025—strong financial results, solidly in line with our expectations that we set last year at this time. Despite the changing media landscape, our performance demonstrates that we have both durability and stability in our broadcast model and the operational execution expertise of this management team. We look forward to closing our pending acquisition of TEGNA and bringing that operational expertise to bear on our synergy plan and reinforcing our position as the largest local broadcast company in the United States.

Thank you for your continued support over these last twenty-two years of quarterly earnings calls, and we look forward to updating you on our next earnings call in about ninety days’ time. Thank you. Have a great day.

Operator: Thank you. This does conclude today's teleconference. You may now disconnect your line.

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