Nexstar Media Group Aktie

Next up, we have Nexstar Media Group, who will be joining us virtually. I'll start with the company introduction while we get them up on the screen. Oh, here we go.

So Nexstar Media Group, which is headquartered in Irving, Texas, is the largest local broadcast television group in the U.S. following the acquisition of Tribune in 2019, and the landmark acquisition of TEGNA, which closed in March 2026, the company now owns or partners with broadcast stations reaching approximately 80% of all U.S. television households, which is subject to the current hold separate order, which we'll get to. Nexstar also owns NewsNation, a national cable news network and has a 75% majority stake in The CW broadcast network. The company has around 30.5 million shares trading just over $181 when I last checked for a $5.5 billion equity market cap, $11.8 billion of net debt, $17.5 billion total enterprise value.

We have Nexstar's President and Chief Operating Officer; Michael Biard; and EVP and CFO, Lee Ann Gliha with us virtually. Thanks so much for joining us.

So kicking off with the TEGNA acquisition. Can you please start by walking us through kind of the rationale for this transaction as well as the litigation, an overview time line and path to resolution?

Yes, we could probably talk all day on that -- feedback here. So I'm not sure, if you hear me all right?

We can hear you.

All right. All right. Let's [indiscernible] turn on my own volume. Hey, Ann, can you hear me all right?

I'm getting lag as well.

Yes. Hey, all. Hanna, can you hear us okay?

We can hear you pretty good.

Okay. [indiscernible] Yes. I mean -- we've talked quite a bit about the rationale for the acquisition. So I won't spend a ton of time on that. I think the market understands that we're in a business where scale matters, right? Both in terms of operating scale across our station footprint as well as negotiate scale dealing with both suppliers programming and distributors of our programming. I'm saying, [indiscernible] it's terrible in terms of the feedback, so I'm not sure if you want me to continue like this?

And whoever is running the show, the show lead to 18th Annual Gabelli's Sports & Media Symposium...

We're hearing you okay still.

You are. Okay...

For anybody that's on virtual, it's not going to work.

Yes. Yes, we are saying that maybe [indiscernible]. Oh, I muted that one that makes a difference. Aha, there we go. Okay. All right.

Well, I won't repeat myself in terms of the justification for the TEGNA transaction, I think we've spoken publicly about that. I think the market understands that. So why don't I get right into kind of where we are today. So I think that's the question that we hear most often from folks, which is sort of give us an overview of the litigation kind of status, time line, path to resolution and so forth.

So briefly, we're in federal court in Sacramento, and we're also in front of the Ninth Circuit Court of Appeals, which covers that trial court. We essentially have two separate tracks right now for the litigation. We have an appeal that's pending on the -- that's an appeal of the preliminary injunction that was entered by the trial court. And then we have the underlying trial on the merits. So the appeal, even in success won't resolve the case entirely, right? It will, in success, materially reduce the scope of the preliminary injunction and/or eliminate the state plaintiffs for a lack of standing. So we feel pretty good about both sets of claims there. And where we are in that process is we have filed our opening brief. The plaintiffs have a responsive brief that will come in the next couple of weeks, and then we'll have an opportunity to reply. We're looking forward to an oral argument, hopefully, in August, maybe as late as September, and then it will be in front of the court, and we'll get a sense of, hopefully, in the oral argument, what their time line is. But that's a matter of probably months, not weeks, for sure, going forward.

In terms of the underlying trial, I guess the path to how that proceeds will, at some level and probably materially so, hinge on what happens with the appeal, right? If we're left with just DIRECTV and a much narrower preliminary injunction, I guess the antitrust claims by DIRECTV will be seen much more starkly for what they are, which is, in our point of view, just a commercial dispute where DIRECTV has leveraged the courts to improve their position at the bargaining table. If the states remain, that will probably be a very different animal. As you've seen probably from some of our comments, we think the state's involvement here is largely political performance. So I'm not sure what the path to resolution like that or in that context will look like other than prevailing on the merits. And we feel really good about our position on the merits, and we're looking forward to actually the discovery process where we can get an opportunity to go through that procedure and make our case in the trial court.

So either way, whether in success at [indiscernible] level or otherwise, we expect we'll be preparing for a trial that will probably come sometime in mid-2027.

Can this might be unmuted for the virtual. Are we good?

We can hear you.

Okay. Sorry about that. I was hoping we can start on the business, on the core ad environment and pacings. Q1 saw non-political ads flat, slightly positive. Q2 is tracking down a bit, flagged some macro-driven caution around gas prices and consumer sentiment. Is this a cyclical air pocket or something more structural?

I will take that. But if could you put me back on the mute, that would great. Okay, great. Here we go. So yes, we did see a flattish non-political advertising in the first quarter, which was good. We were aided by the benefit of having the Olympics in the first quarter, which was good for Nexstar, but really good for TEGNA, given their extensive NBC portfolio. We did see, in the first quarter, a sort of shift in terms of the number of categories that we track all of our categories and just look at which are up or which are down. In the fourth quarter, we had about half increasing, half decreasing. And in the first quarter, we had more like 2/3 decreasing. When we see sort of that sort of uniform decline, that there wasn't anything that was particularly standing out. So to us, that reads more economic and macro.

But the other piece that you have to sort of make sure that you are focused on here is that we do have a crowd-out impact as well. The first quarter had very good political advertising, which I know we're going to get to in a minute. And second quarter, obviously, we expect to be good as well. So there's a component of this in addition to just macro that is related to crowd out, which is a very real impact on a go-forward basis. We do not see this as something more structural. This is a place that we've been before when we see sort of some macro headwinds. And then we also are seeing the impact of crowd out from a political perspective.

And then on political, which you alluded to, ad impact is projecting full year 2026 broadcast political slightly below 2024, but ahead of 2022. Can you talk about how you're thinking about Nexstar's share and the range of outcomes for this cycle? And then also potentially address the Supreme Court's ruling on the lowest unit rate access for PACs and how you plan to address that?

Happy to do that. So yes, first quarter, we saw really good political spending. We had the first quarter on a pro forma basis, including TEGNA. We were up 89% over 2022 and 19% over 2024, and that was driven in large part by the Texas primaries, which attracted quite a bit of political spending. We are seeing good continuation of the political trend into the second quarter. We -- the benefit of Nexstar is that we have a pretty broad portfolio. And when you look at just in general, what -- we spend a lot of time every single political year going through and looking at every single market and really kind of drilling down into the -- what district is being contested for what election and how do we cover it. And so when we look at that, and we look at the different types of elections, whether it's a local race or a Senate race or a gubernatorial race, we kind of look at how many of these elections are going to be contested and how does our footprint overlap with that.

And typically, Nexstar's footprint overlaps with north of 80% or 90% of the contested election markets. And that's beneficial to us because what happens is, inevitably, though, you'll think a race is going to be hot and strong and there's going to be a lot of political spending in it, and it turns out it's just not. But then there'll be another race you didn't think was going to be contested and then it is contested. And usually, when money moves around in the system, it hits Nexstar in some way, shape or form.

And so historically, when you look back, we've had a pretty consistent market share of broadcast political advertising spending. And that really ranges from kind of low double-digit to low teens market share. This year, based on how we stacked up versus the -- what we see as the contested election cycle, we think it's going to be a low double-digit market share of what gets spent on broadcast television. TEGNA, historically, if you look back, it's kind of been in the high single-digit range as well. So together, we should have a pretty good political season this year. And we're feeling good about the trajectory and what we've been seeing so far.

But as we all know, you can't really take what you're seeing in the first quarter or the second quarter and extrapolate that for the rest of the year. Really, the bulk of the spending comes in the kind of 8 weeks around the election. And that really is dependent on what comes to bear at that point in time.

I know you asked about the lowest unit rate. This is a question that gets asked, which the Supreme Court is potentially going to be looking at who that lowest unit rate applies to right now, it just applies to candidates, and there is a request for that to expand out to cover parties and PACs and make sure that everyone that's spending money from a political perspective, from election perspective is guaranteed that lowest unit rate. And really, we feel like this is going to have not really any kind of materially negative impact on Nexstar or the industry in general because really, it comes down to a supply-demand calculation. And as you get closer and closer to that election, there's just more demand than there is supply. And we just need to make sure that we are actively managing our rate card and doing what we need to do best with respect to do we allocate a slot for commercial advertising? Or is it allocated for political advertising and what's going to generate the most money.

So that's -- we don't really necessarily see this being a problem more so, just we need to make sure that we're managing it actively.

Digital is on track to surpass national TV ad revenue this year. Can you talk about the key drivers of that and how you think about the longer-term mix shift here?

Yes. So we have -- when we think about our business, we think about the great relationships we have with the local advertisers and the fact that we've got television stations that have been in these markets for decades and decades and decades. So that provides us a special relationship with a lot of these local advertisers and enables us to not only talk to them about how they can be spending their money on local television and local news, but are there other things that they can be spending their advertising dollars on that Nexstar can help them achieve.

So whether that is, hey, we want to spend money on the local news, but we really would like to also have some entertainment content or we want to have more sports content or we want to do a digital campaign. Those are things that we can -- our local sales force can sell to these local advertisers. And really, it's been a nice growth area for us. We've seen, from a local perspective, our digital services businesses grow kind of in the high single-digit to low double-digit range, and we see that continuing. It's really about kind of that audience extension and trying to create more of a value-added campaign for these local advertisers.

And so as we continue to focus on that and we grow that piece of the business, we have seen that more transactional-based business in our national advertising has become -- that's a little bit more transactional based, and it's just based on kind of advertising -- the advertising cycle. And so as we see digital kind of overtake national, we think that, that should provide some more longer-term stability to the top line, which we think is going to be very, very beneficial to the company over time.

And moving on to the retransmission and reverse comp dynamics. Sub trends have improved for the last several quarters. On a combined basis, the year-over-year declines are looking better than a year ago, driven by Charter's rebundling strategy and some early skinny bundle growth. How does it change your view of the distribution revenue trajectory from here?

Yes, I'll take that one. I guess let me give you our view of kind of what's happening with some of those trends. I think we see two factors contributing to the flattening rate of erosion, right? One is what you mentioned, the Charter approach to rationalizing the bundling and packaging of both linear and direct-to-consumer products that are out there. And I think also what's happening is there's a continued distillation of the pay TV universe to subscribers that really care about what's on linear programming, which is largely dominated now by sports and news. There are folks out there who don't care about that programming. I know it's hard to imagine that they exist. But our view is those folks are largely gone from the system. And so pay TV is much more sticky for the cohort that remains.

So backing out, we're obviously heartened by the trends. We wish they were a little bit more widespread. Right now, what we've seen is green shoots certainly from Charter. And we wish others were as aggressive in pursuing that model as Charter has been. I will comment as an aside, I wish DIRECTV would spend as much time focusing on their product as they do elsewhere. They probably would see performance that's closer to Charter's. But they've chosen to spend their time fighting broadcasters on retransmission consent, opposing every form of broadcaster M&A at the FCC and then pursuing litigation rather than negotiation. A bit of a digression, but I think it is relevant to the trends that you're seeing and some of the disparity in performance amongst different pay TV distributors.

So we're not totally surprised by the subscriber trends. We commented, I think, as early as fall of 2023 that we thought Charter's approach made good sense both for consumers. And if it was widely adopted, it would be a favorable trend for broadcasters and others on our side of the table. So we're gratified to see that starting to play out and hope it continues. You unmuted, a good long while ago.

We can hear you now. I apologize.

All right.

Ask the question again.

Oh, apologies. Just on network comp, in your view, has this line stabilized? Or where are we in terms of that trajectory?

Yes. Hard to know. I guess that the expectations on that trajectory, I think, are questions that are probably better put to the networks, right? And I suspect the answers you would get from them would not necessarily be uniform because I don't think they're all aligned in their approach to their affiliates or the appreciation for our contribution to their business, right? I think that the disparity in their respective approaches is evident, for instance, in how they treat their streaming services. Do they look at the network as sort of their primary product and the streaming service is a complement to that? Or does the network exist to sort of feed the streaming service and it's -- their streaming product is kind of their first priority.

I think how they answer that question says a lot about how they expect to deal with us, right? And the more the network sort of leans into their streaming product and treating the broadcast network as a de facto barker channel for the streaming product, then the less value that network is going to have to us, and I think the less we're going to be willing to pay for them, and I would expect the less that they would expect us to pay. The other hand, if they're going to lean into their network more and understand that a broadcast affiliate base, a healthy affiliate base is really the special sauce that distinguishes them in the universe right now, that will be a good thing for both of us.

And I'll just comment on that last point a little bit more. I think -- and I've said this to each of the networks directly, if they look at the affiliates as really a critical part of expanding the reach of their network, right, in a way that makes a broadcast network unique, that's really a good thing. The alternative is they want to be a pure-play streamer, they can go compete directly with Big Tech. If they want to be a cable network and go direct to distributor, well, that model is pretty clear as well. But I think that the really unique aspect of a broadcast network that gives them a leg up when they're at the table competing for rights is the fact that they have reach over the air and combined with localized products that only a broadcast affiliate base can bring to that product.

So I think we'll see how it plays out. We like our position. I will say that this is an area where scale is important, and it's another rationale for the TEGNA acquisition.

You tracking towards Q4 profitability and new partnerships with ESPN and Roku, if you can talk a little bit about what you're anticipating for the CW through the remainder of the year and moving forward as well as the longer-term margin structure of the CW in your portfolio, that would be helpful.

Sure. For everyone's benefit, just to make sure we're not talking past some folks who may not be aware of the deals that we've struck. So we've struck two partnership deals for the CW, one with respect to our live sports programming and ESPN. So ESPN starting in August, will have essentially a CW vertical inside all of their digital platforms, whether that's on apps or websites and mobile apps, connected TV apps, you name it. CW vertical will exist there where all of our live sports will air simultaneously inside the ESPN digital portfolio. We're super excited about that. It expands the reach of our programming in a way that allows us to not only sell the advertising to a broader base, but also reach subscribers to the ESPN products that may be outside the pay TV system today or outside the over-the-air distribution system that all of our affiliates have.

The other deal we struck is with Roku. And that is both a library deal and a current season deal. So all of the entertainment programming on the CW will air inside a CW vertical on Roku starting next day, right? And again, just like the ESPN deal, it allows us to expand the reach and broader digital inventory, frankly, for our sales team to sell.

So backing out of both of those. I think to your question on the sort of future of the CW, listen, we're incredibly bullish on the long-term potential of the CW, not only as a stand-alone business, but just as importantly, maybe more importantly, for how it complements our broadcast portfolio, right? The reason we got into the CW business to begin with is because we were the largest CW affiliate. We have dozens of CW affiliated stations out there. The growth of the CW programming and the conversion of it from largely scripted programming to now almost 50% live sports, is a great thing for our stations, and it complements perfectly with iconic news brands like KTLA in Los Angeles, WGN in Chicago. And the marriage of that local market-leading news combined with the CW national programming is just a great blend for us, and we're super excited about it.

So I think we will continue to be creative and nimble as we have both with the Roku deal and the ESPN deal. And I think our portfolio allows us to be probably a little bit more opportunistic than the other major broadcast networks. And what we've seen is rights holders who may not be able to get a deal done with one of the other major broadcast networks are thrilled to find a home on CW, and we've seen growth of the programming really for every franchise that we've brought there.

Helpful. And then just kind of expanding on that a little bit further with the RSN model continuing to unravel, local sports rights are increasingly up for grabs. Can you just talk about Nexstar's view on broadcast role in local sports distribution, I mean if the TEGNA station footprint changes that at all?

Well, I guess last question first. I think that given the fact that we're under the stay separate order with respect to TEGNA and can't operate those stations, there's really nothing in their footprint that changes the way we're thinking about anything right now when it comes to actually managing those stations day-to-day. So outside of that, in terms of our view of the local sports, yes, I think, listen, local sports rights continue to evolve in it. And I would say, an uneven, almost unpredictable way. I was struck by MLB proposal to labor last week where they're proposing to pool all of local rights and then divide up the revenues pro rata. That's a radical change, right, when you think about sort of the disparities that exist in the regional rights and the monetization of those between teams like the Dodgers on the one hand and pick a small market team out there that you want to, I don't want to pick on anyone in particular. That's a huge issue. And those disparities, I think, were significant in contributing to some of the rapid demise of the RSNs.

So as we think about it, I guess, I'll start by saying we have no interest in trying to recreate the RSN model through retransmission consent. We've said that publicly. We don't think that for several reasons, that makes a lot of sense for us. And I'll have to start with the fact that in most of our stations, trying to carry a full season of a team, let alone multiple teams in a market would be hugely disruptive either to the programming that we have on our big 4 affiliated stations or the programming that we have on our CW stations, right? There's not a lot of shelf space for us to carry full seasons of teams.

Secondly, the economics of that don't make a lot of sense. We don't have any interest in writing big checks that we then have to go pay for through increasing retrans. So we've seen others try and do that, and I'm not sure how well that's going to work out for them, but that's their business. We have a slightly different point of view. We think that broadcast is a perfect complement to sort of a multi-platform regional approach. You can see that in deals that we've struck with, say, the Clippers in Los Angeles, where we have 15 to 20 games of the Clippers on kind of a game of the week approach, that complements perfectly with the Clippers, both regional RSN business. And to the extent they have that going forward, that deal, I think, is over now, and their direct-to-consumer product, right? And we've done the same thing in Dallas with the Rangers, where we have a game of the week that complements their pay-TV approach and their direct-to-consumer approach. And we think leveraging broadcast for that top of the funnel sort of brand building is really critical for teams, right?

I think if they want to go strictly to RSNs or D2C, it's hard to grow their fan base, right, on those platforms. And we've seen teams who understand that are really interested in leveraging broadcast for that brand building. So we'll be -- we'll continue to be disciplined and we think opportunistic at the same time in terms of how we approach the local sports space.

Yes, and we will be moving on to our next session that Alec from my team will be hosting with Manchester United. Thanks.

Okay. All right. Great. I'm happy to be kicking off the conference. With Nexstar Media, we have Lee Ann Gliha, Executive Vice President and CFO. Lee Ann, thanks for being here.

Thanks for having us.

Okay. So Nexstar is about to turn 30, having turned from a single station to the largest local broadcaster. Maybe can you help set the stage for investors and how you see the company positioned today and what excites you for the next 30 years?

Yes. No, great. I appreciate it. Thanks for having us here. I was just looking at an e-mail I got from a former colleague who forwarded me something from an Investor Relations firm called Quartr, who looks at the top stocks that have been performing over the last 15 years. And Nexstar is the #5 performing stock over the last 15 years, ranking just one spot below NVIDIA. So I think that's -- it's pretty -- it's a good testament to what Perry and the team have been able to build over the years. And that really has been built on the back of the broadcast business model. And at the end of the day, we really believe that broadcast and that media is fundamental to how people view television. It's really fundamental to live sports, live content and local news viewership.

And we really have been able to demonstrate that business has been really sustainable and will be sustainable into the future. And the vision that we see for the company going forward is that no matter where you're going to view your television content, whether you want to view it over cable or satellite or over IP, you're going to be viewing that via a Nexstar television station that's going to be provided to you on those different services. And so we really believe that kind of the sustainable piece of it. I think that we have a very strong local footprint and that really has been helpful in driving the local news side of our business and the local sales side of our business. When you think about the overall investor landscape and all the different types of media companies that you are able to invest in, just broadly speaking, we believe that we are the choice for investors when it comes down to the local segment.

And we see that really continuing to proliferate going forward. We're getting into a variety of different new ways to service our local advertisers through providing a variety of different digital type advertising services, expanding our business model out. We're looking to advance our ability to monetize our inventory via programmatic channels. And so we view those as kind of core growth engines to our core base business. But then if you think about Nexstar as a broader company, we've got a number of different growth engines just within the business. So first of all, we've got a couple of networks. We have a broadcast network called the CW Network that we acquired in 2022, and we've been able to take that business from losing literally hundreds of millions of dollars to what we anticipate will be a profitable fourth quarter this year. And we've been able to really transform that business into a very strong programming slate, including, I think, nearly 50% of our programming hours are now sports and sports related. And then we've got -- and we expect that business to continue to grow.

We've got NewsNation, which is our cable news network, which is really meant to be an unbiased news network when you've got other networks out there on the left and on the right, you can come to NewsNation and really get the fact-based journalism that you're looking for. And that business has done really phenomenally well over the last -- since we launched it over the last 4 years. And in the first quarter was actually ranked as the 35th watched network of all networks. That's up from in the high 80s to low 90s last year. So we're really seeing some good strong growth with respect to viewership of that news network. And then the other area that we think will be good for growth for us going forward we -- the monetization of our spectrum. So we've got spectrum that is covering pro forma for the TEGNA acquisition, 80% of the country.

We are participating in a joint venture called EdgeBeam Wireless that together has nationwide coverage of the entire country. And so we're -- EdgeBeam is now working on monetization alternatives to lease out that spectrum for high-speed data transmission services. It's really the same sort of high-speed data transmission service that you're going to see that any wireless company can provide. The only difference here is that we are -- can provide those services at a very low cost because we already have an infrastructure that is fully built out because our towers are everywhere. So we really feel like we've got -- if you sort of boil it down, we've got a very solid core business that will continue to perform. We've got a number of growth engines in terms of digital advertising and hyper servicing our local customers, growing our networks of CW, NewsNation and then monetizing our spectrum. So we view that there's a long trajectory here for the next 30 years. Hopefully, we'll continue to be on that Quartr list going forward.

Got it. That was a great overview, and we'll cover some of that. Maybe we'll start with TEGNA. So deal closed on March 19. Can you just briefly review events since then and where matters stand on the various related legal proceedings?

Yes. So we closed the deal on March 19. We had approval of both the FCC and the DOJ. We had provided over 7 million pages of documents for the DOJ and the FCC to review. We then subsequently were challenged in court by DIRECTV and their owner TPG, who have their own commercial business that they're trying to pursue. We've also challenged by a number of states attorneys general. And what we ended up having was a preliminary injunction put in place on our transaction, which means that we need to effectively hold separate the assets of TEGNA.

And so while we own the company and we have the ability to access the cash and pay down debt and continue to benefit in that regard, we do have to have those operations operated separately from the Nexstar stations. So that means that TEGNA operates under its own retrans agreements. TEGNA operates its own operating strategies. We're not able to execute on any of the synergies that we had really planned, save for a few opportunities like elimination of public company costs and those types of things. So we are in that process. It's a highly unusual process. You don't typically see something like this happen. And so I just caution everyone, we're going to try to be as transparent as we can in telling you what's happening as it's happening, but it's -- really we're in the hands of the courts at this point in terms of either the appeal at the Ninth Circuit or the ongoing trial in the Eastern District.

Got it. And then as it relates to the industry, it would be great to hear your view of where you think the FCC is with regards to any action on the 39% ownership cap?

Yes. I think that the I can't -- we can't put ourselves in the minds of Chairman Carr, but I can point you to everything that he said to this point, which has been very positive statements about the need for deregulation and the fact that the rules that are in place today, limiting our access to only 39% of the country are very antiquated. So I would suspect that, that's a rule making that's still coming, but we -- I don't have any particular insight into what -- when that might happen.

Got it. All right. Let's shift to the advertising market. So at earnings, you had noted some incremental softness into Q2, more categories declining and growing. Maybe can you unpack what you're hearing from your marketing partners and how you expect items like higher gas prices are playing a role?

Yes. I think we have -- every quarter, I look at -- we have about 42 different categories of advertisers. About 60% of the volume of those advertising is -- comes from services-based companies, about 40% comes from goods-based companies. I tend to track how many of those categories are up or down on any given quarter just as a sort of a signal on like is this -- is whatever happening in the quarter isolated to a couple of categories? Or is it more broad-based? And what we have seen in the -- going into the second quarter is that we've got about 2/3 of the categories declining versus about half in the prior quarter. So I think we're looking at a little bit of a weaker environment. I think the -- when you look at -- when you see that many categories declining to me, it's just much more of an overall arching economic sentiment, and you tend to see that, right? Advertising is very cyclical. As you're starting to see gas prices increase or you're seeing concerns about the economy, that's the one variable cost that companies can pull back on. And so we're seeing a little bit of that going into the second quarter.

And on that 60-40 services to goods mix, I know you've talked about that as a natural hedge during the tariff uncertainty last year. Any sense for how that mix lines up in a period of economic uncertainty?

I think that in a period of economic uncertainty, it all gets taken into consideration sort of similarly. You don't -- the goods versus the services component really is much more apparent when you have sort of a supply chain issue, and that's where we have a little bit more of a hedge. But I think in general, you do see a little bit of more cyclicality that happens just in general. But having said all that, we do have about 70% of our advertising comes from the local segment, and that segment tends to be much more resilient in times of economic uncertainty because you really are talking about companies that rely on advertising to get people to come into their store, to buy their goods. And if they do start to pull back on that advertising, they see it in their own bottom line. And so we see that sort of line being a little bit more stable than overall advertising as a whole.

And just beyond the category mix, has the booking pattern itself changed, right? Are advertisers committing later? And what does that mean for inventory management?

We're really not seeing that at all, no, very similar to what it has been in the past.

Got it. So we understand that Nexstar is on track for digital revenue to surpass national television advertising this year. Maybe can you walk through the key drivers of digital and how you think about the growth runway?

Yes. So when you think about our digital advertising, we have several components of digital advertising. I would say probably a little more than half of the revenue is coming from our O&O advertising. So that would be our own properties, our websites, our own CTV apps, things like that. And then the other half is coming from third-party -- sale of third-party inventory. And so really, that is when we go and we have our local sales force and they go out and they talk to an advertiser, the advertiser wants to buy the local television station because they know the benefit of that. But they say, "Hey, you know what, maybe I want a little bit more entertainment content in my buy or I would like to address a specific audience. Well, we can provide that as a total solution to those advertisers.

And that really has been in the form of, for the most part, CTV, third-party CTV inventory. And those -- that business has been growing very, very strongly. And that's the piece that's kind of really kind of taking off. The other piece of our inventory from an O&O perspective aside from our local websites is our national websites like The Hill and NewsNation and CW, which also have -- are generating good advertising revenue, but not the same sort of strong level of growth that we're seeing on the local side.

Can we just talk through the CTV opportunity a bit more? I mean, what's the content strategy on those apps? And how does that develop as you compete for national platforms also looking for those local dollars?

Yes. No, for sure. I mean we basically have launched apps, CTV apps across all of our television stations over the -- all of our news-producing television stations over the last year. And the purpose of that was really to just create more CTV inventory for ourselves. That was our owned O&O, CTV inventory versus just selling third-party CTV inventory.

And the other piece of it is really trying to attract different audiences. If you can be online, you can create some content that is a little bit of a different feel -- look and feel than what you're seeing on television, maybe a little different time periods in terms of how long you're watching a video clip. Those things tend to provide a little differentiation to advertisers and to the audience and help expand our overall base. And so really, that's been the plan and the point of it, and it's been doing very well.

Okay. Great. Maybe switching gears to political. So at the start of the year, we thought there was some caution among broadcast groups regarding the 2026 outlook. However, the sentiment seems to be more upbeat in April and May. Maybe you can walk us through kind of what indicators you've seen so far and how your assessment of the midterm cycle has evolved.

Yes. Q1, we had a very good Q1 as did TEGNA from a political perspective, and that was driven in large part by some outsized spending in Texas. It's really hard to extrapolate what happens in any given quarter in a political cycle to the rest of the year because most of that spending does get done in the 8 weeks kind of around the election. So I would just caution everybody from getting overly enthusiastic of extrapolating what's happening in Q1 to the rest of the year. I will say we do spend time looking at the -- what some of the research firms are saying about the sector and AdImpact is one that we spend a lot of time with. And they projected that for broadcast, the 2026 year will be slightly down from the 2024 year, but ahead of the 2022 year, which is the comparable cycle.

Got it. There is a potential Supreme Court ruling that could change how political advertising gets priced at the station level. Can you just walk us through how you see that playing out and whether that's something that raises concern?

Yes. This is really just -- there's a requirement that candidates have to receive the lowest unit rate that we are -- that we offer to advertisers. And that would be just expanding out that lowest unit rate to be applicable to more advertisers in the political segment. And really, this comes down to a supply-demand question. As you -- as I just mentioned, you really are getting most of your dollars in that sort of 8 weeks around the election. And so as you get closer and closer into the election time, there's more and more demand and less and less supply for that inventory. And so it's just a matter of properly managing what our lowest unit rate is and managing that process which we think we can do.

Got it. Maybe going back to CTV, that's been the kind of fastest-growing channel for political spend. How is Nexstar positioned to capture some of those political dollars flowing towards connected television?

Yes. So CTV is something that has been growing pretty quickly. And that's actually the point that we -- a part of the reason why we created all of these apps in our local markets is to try to capture more of those dollars. And so that's really the extent of how we will be able to benefit from that in this election cycle, and that's fairly limited at this point.

Got it. Why don't we shift to distribution. So you recently expressed more optimism on subscriber attrition than in your original 2026 plan. Maybe can you unpack what's giving you that confidence? And are you starting to see skinny bundle launches or MVPD repackaging efforts show up in your sub counts?

Yes. I mean it's been -- it look great. We put together these summaries where we look at just the overall universe, and you guys can do the same because the information is available to you. But the -- in the first quarter of last year versus the first quarter of this year, the year-over-year growth rate is better by more than 1 point, so -- or decline rather. And that's really driven in large part by, I would say, not a variety of different strategies that the MVPDs have and most notably, the Charter strategy, which is not the skinny bundle. I call it the more is more strategy, right? They have taken all of the CTV content that's out there, the over-the-top Paramount+ and Peacock and all of those and rebundled it into a massive package that creates a lot of value for their consumers.

And they have really just -- I looked at I graphed out their rate of attrition. And for a long time, it was like a ski slope, a green ski slope going down, but now it's like a vertical cliff kind of coming back up in terms of the rate of attrition. So they've done really well, and that strategy has worked to so make video very important to them again. On the other hand, you do have companies like YouTube that are creating what I call the less is more strategy, which is a skinny bundle, and that seems to be working well as well. So both of those things together, I think, are going to be beneficial to the pay TV ecosystem and Nexstar.

Great. On the net retrans side, so you've guided to mid-single-digit growth this year. I think Perry has framed reverse compensation is on a downward trajectory to use these words. Maybe can you speak to the dynamics around content exclusivity that kind of underlie your confidence here? And what have the conversations with network partners been like on this point?

Yes. I mean, over time, what you have seen is these -- as I just mentioned, these sort of direct-to-consumer platforms that have been created by the networks that have made our content or made the content that they provide to us less exclusive because they're providing that content available to the consumers over those platforms as well. And so previously, when we were getting that content exclusive, that was -- there's one price point for that, and there's another price point when that content becomes less exclusive. And so you can just see it in the numbers, and you can see it in our guidance for the year in terms of what our -- the success that we've been able to have by using that rationale with the networks.

Got it. So staying on content exclusivity. So the potential for the NFL to open its rights window early has received a lot of attention. Certainly possible, we see nothing happen or no change. But -- in the scenario of networks paying more in return for, say, guaranteed rights through 2033, how do you think about the flow-through impact to your stations?

Yes. If you look back in time at prior cycles when the NFL increased their rates, we didn't really see a similar commensurate increase in our rates. Sort of just what I was talking about a minute ago, you can kind of think about what's the package of inventory or package of programming that is being provided to us by the networks. There's sports programming, which is doing well from a ratings perspective and entertainment programming, which is doing not as well from a ratings perspective. And so over time, how do we end up paying for this content? Do we pay maybe more for sports and less for entertainment in that bundle.

So we think that we're not entirely worried about that incremental cost on the sports rights coming back to us dollar for dollar because there's other things that, that network is providing to us that are maybe less valuable. The other thing we think could be interesting is as some of these networks are maybe paying more for premium sports content, are they going to have to rationalize some of their other sports content that the CW could potentially benefit from by providing an outlet for that content on our air.

Yes. We'll come back to CW Sports in a second. Maybe just staying on this point, though. So we've seen recently some retrans disputes for local sports content has become a sticking point. And I think you and Perry have previously expressed some skepticism on the RSN model for broadcast, but you do have some rights contracts now as a result of M&A. So as the regional sports model kind of further unravels, how are you thinking about the place of kind of stations to add some of this game content?

Yes. I mean I think we're still pretty limited in terms of the amount of local sports content that we have. And just given the way of the nature of how retrans gets negotiated, we really have to look at each of these local sports contracts on a case-by-case basis and make sure that they pencil out from a profitability perspective. I don't think our point of view has really changed on that. We are seeing the dislocation of that RSN model. And I think that there'll be some opportunity for us to pick up some sports rights, but I don't know that it will be super meaningful.

Got it. All right. Moving to the CW. So the ESPN and Roku partnerships seem like a new chapter for the network. Maybe can you walk through the strategic logic of putting CW Sports inside ESPN's platform and entertainment on the Roku Channel? And then I don't know, to the extent you can elaborate how the partnerships are structured financially?

Yes. Yes. So we've been working very hard to transition the CW into a sports destination. And so far, it's been, we think, very successful. We're going to have, I think, by -- for the '26, '27 broadcast year, 800 hours a year of sports content, which is unbelievable in terms of where we started. We had started at a network that sports had never been on the network before. And on the weekends, I think we're north of 13 or 14 hours on average on the weekend. So a very, very important part of our programming strategy. But having said that, we're still really -- we're early on. And we thought that in terms of looking at places to put our content that could attract the most possible audience, what better place to go than the #1 sports name, which is ESPN. And they were really looking to create a product that could be a destination for multiple different types of sports rights owners. And so this is a proof of that concept for them, and we think will be really beneficial to just adding to the potential audience for CW Sports.

Okay. And the Roku entertainment?

Yes. And Roku, similar thing, right? I mean -- we have different 2 types of content within CW. We have sports content and we have entertainment content. And again, Roku is the #1 AVOD destination. And so to create a separate CW channel inside the Roku channel will just provide an incremental opportunity to just have more access to more audience, which is what we're trying to drive at this point. It's all about driving audience, driving advertising dollars on a go-forward basis.

Okay. And to put it in perspective on sports, you started with LIV Golf, I think, to your point on the NFL, you'll see you see opportunities sort of level up CW Sports brand, too.

We've been leveling up as we go. We have the NASCAR O'Reilly Auto Parts series, which is doing really well for us. We've got ACC. We've got Mountain West. We've got the Professional Bull Riders Association and the PBR. And so it's -- we're continuing to provide kind of a variety of sports programming that is not the sort of top-tier sports programming, but very watchable and with dedicated audiences. And so we just feel like we've created a great bundle here and are going to continue to grow it as we can.

Okay. As it relates to CW, I think you've mentioned a possible near-term headwind from Nielsen's transition to a different measurement methodology. Can you help us understand what that means commercially for the...

Look, at the end of the day, the CW is still relatively small from a -- for Nexstar as a percentage of our overall advertising revenue. So it's not like super meaningful in terms of our consolidated figures. But when you drill down into the CW, we have been seeing some headwinds with respect to the transition to the big data methodologies. And so we are working through that and trying to make sure that we are getting -- putting ourselves in the best position to sell that advertising going forward.

Okay. You talked earlier to profitability arriving in Q4 beyond breakeven. How do you think about the longer-term margin structure of the CW and what kind of contributor it can become?

Yes. Look, the CW, when we acquired it, was really meant for 2 different purposes. First purpose was really a defensive play to make sure that we continue to have CW programming because Nexstar is the largest affiliate of the CW. And we've only grown that position over time. And so the benefit that we're seeing from the CW is really a couple fold. One is the fact that we've been able to take the network from losing money to being profitable by the end of this year, but we've also been able to expand the number of affiliates, CW affiliates that we have on Nexstar stations, which we've been able to monetize very, very effectively. And so on a go-forward basis, from here, we do expect the network to continue to be profitable. That's assuming that we don't make a reinvestment in some other content right that would be an investment play going forward.

Got it. All right. You covered this a little earlier, but NewsNation, I think, was the fastest-growing network in primetime in March, up significantly across demos. Maybe just talk about what's driving that inflection, where the network sits today in terms of financial contribution.

I think this has just been a story of just kind of steady growth. If you kind of look back over time at NewsNation's growth in terms of the audience, it's just been kind of steadily growing quarter after quarter after quarter. And I think we're -- sometimes you catch some news that people tune into and that really then makes them knowledgeable of the station and the channel and the work that we're doing and then causes them to kind of continue to retune in. And so we're expecting that to continue to perform. Very excited about the increase in the rating ranking.

It's going to take some time to kind of monetize it over time, right, because you've got the -- every year, you have the upfront that's based on what you had done historically and what you expect to do. And so we just had that. And we'll have amounts that we can monetize in the scatter market. But then next year and the next upfront, hopefully, we'll be in a much better position. But the network from day 1 has been profitable. If you look at it, you compare it to any one of our television stations, it's one of the better performing stations in terms of profitability. And so we anticipate that, that profitability will only continue to grow as we grow the audience.

And as far as developing that model, I assume the midterm probably play a -- that cycle plays a role?

Not so much. I would say, we always say this, but it actually is true. All politics is local. And so at the end of the day, the dollars do get tend to spend -- get more spent on the local side of the equation.

Okay. I meant more on the development of...

Oh, I see. Yes. Well, no, it's interesting. I think we do obviously do our fair share of political coverage. We have an asset that is the #1 website that people go to for inside the Beltway information, which is The Hill. And we've got programming content that's on NewsNation that is reflective of that. But I would say a lot of times, NewsNation is kind of counterprogramming all the political content that is out there. We're focused on things that Americans care about other than just politics.

Got it. I want to ask on EdgeBeam, which is located here in Boston. So the venture has paying customers. I think at some point, you had described the revenue opportunity maybe somewhere down the line as potentially [indiscernible] distribution. Maybe just walk us through what the commercial pipeline looks like right now and kind of what are the milestones that investors should be focused on?

Yes. So as I mentioned, we have this joint venture with a number of our partners. And that really has been, I think, a huge positive event for development of ATSC 3.0. If you think about it, people say, "Oh, you've been talking about it for a long time. Well, I think we've -- had to have been talking about it for a long time because it wasn't until we kind of got to creating this joint venture that we could have that scale, that nationwide scale that can be monetized then to potential counterparties that can utilize that spectrum on a nationwide basis.

We've got a great CEO, Conrad Clemson, who is -- who runs EdgeBeam Wireless. And so we're all now speaking with one voice to the entire potential user base for this spectrum. And there's -- people talk about what are the use cases. The use cases are endless. The use cases are exactly the same thing that you're using wireless data for. It's -- but we think that there's a variety of different things that are kind of near term. One thing that we're spending time on is digital signage. That's an area where we can get low-cost access to the infrastructure.

Perry has talked about having a backup GPS system. If you think about how does our spectrum work? Well, we are actually meant to be for television sets. And so we go through walls. We can have very good receptivity. We don't have to -- we're a terrestrial-based service. So you don't have cloud cover issues when you're looking at trying to figure out where the spectrum is. And so it ends up being incredibly much more accurate signal in terms of trying to figure out from a GPS perspective. And so we're looking at that, and we're looking at any number of other alternatives there.

Okay. Maybe one on the cost and operations side. So you started deploying AI across newsroom, sales teams. Where are you seeing the most tangible productivity gains so far? And where do you think AI moves the needle in your business?

Yes. So -- people say AI, but I also think of it as automation in some regards. I think in a lot of cases, we are the anti-AI company in the sense that we actually have reporters that go out and talk to your mayor or go and look at the oil spill and tell you whether it's still there or has been cleaned up. And so I think from a societal perspective, it's important for our company to continue to thrive and to provide those type of local news services. But that doesn't mean we can't benefit from automation and from generative AI to help our processes improve. And so that can be anywhere from helping our sales force to helping automate if we wrote a script, does it -- can it go on to a news article? Are there automation that we can do with just our newsroom floors and help improve the ability to be a little bit more efficient in terms of how we bring the news to the consumer. But I would say that from a productivity perspective, it's been on the margin so far, and we're still experimenting and trying to develop the best possible generative AI solutions to help processes.

Got it. I think we got time for one more. Maybe just to wrap up, Lee Ann is there anything you'd want to highlight that you think is underappreciated about the Nexstar story?

Well, I think that what tends to be underappreciated is our -- what we believe is to be the longevity of our business model. If you look at our stock price and you do a discounted cash flow analysis and you just look at what that perpetuity growth rate implies if you look at our stock price, it actually implies a negative perpetuity growth rate in the high single digits. And we don't believe that, that is the case. We think that we have a really good business model that will sustain into the future. And if you were to just move that perpetuity growth rate up to low percentage decline or to 0, there's a lot of opportunity with respect to the stock price longer term.

And we think that broadcast television is here to stay, right? It's the -- we think it's a virtuous cycle in terms of being able to provide local news and live events to the entire country. And the fact that we have an over-the-air solution that is free to the consumer, really, we think, is beneficial not only for our business model, but for society, and we think it will continue to perpetuate and help us generate cash flows and revenue streams for the long term.

Okay. Great. Lee Ann, thanks so much for being here.

Yes. Thank you.

Good day, and welcome to Nexstar Media Group's First Quarter 2026 Conference Call. Today's call is being recorded. I will now turn the conference over to Joe Jaffoni, Investor Relations. Please go ahead.

Good morning, everyone, and thank you, Stacy. I'll read the safe harbor language, and then we'll get right into the call. All statements and comments made by management during this conference call other than statements of historical fact may be deemed forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995.

Nexstar cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those reflected by the forward-looking statements made during today's call. For additional details on these risks and uncertainties, please see Nexstar's annual report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission and Nexstar's subsequent public filings with the SEC. Nexstar undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

It's now my pleasure to turn the conference over to your host, Nexstar Founder, Chairman and Chief Executive Officer, Perry Sook. Perry, please go ahead.

Thank you, Joseph, and good morning, everyone. We appreciate you all joining us today. Mike Biard, our Chief Operating Officer; and Lee Ann Gliha, our Chief Financial Officer, are with me on the call here as always. Nexstar hit the ground running in the first quarter of 2026, advancing our strategic priorities across multiple fronts. We closed our landscape -- our landmark acquisition of TEGNA following FCC and DOJ approval, and 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's founding, starting with a single television station in Scranton, Pennsylvania. From the very beginning, Nexstar's growth and success has always 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 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'll now spend a few minutes bringing you up to speed on where we are today with the acquisition of TEGNA. I'll 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 9 markets, divest stations in 6 markets within 2 years and extend expiring retransmission agreements through November 30 of this year. 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 in 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 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've 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 long-standing commitment to serving the 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're focused on presenting the strongest possible legal arguments to the court.

And to that end, we've 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 now 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's 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 lacked jurisdiction at this stage.

Both we and the FCC have been directed to file our responses to the petition by May 11. While we don't have control of the various courts time lines, in the meantime, in compliance with the court order, Nexstar and TEGNA are operating separately, and we are proud of both teams continuing focus on execution and their local community commitments.

Now let's 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 business units, we made strong progress towards our goal of achieving additional operating expense savings, driven by further cost reductions at the CW and broader core operating efficiencies. 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 5.5 years ago and featuring Nexstar's enterprise-wide commitment to unbiased and fact-based journalism, NewsNation was the #1 fastest-growing network in prime time across all major broadcast and cable networks in the month of March of 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 of primetime ad-supported cable networks in the first quarter.

As you'll hear more from Lee Ann 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 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, the free universal access offered by local broadcast television is not just convenience, it's an essential public service and central to Nexstar'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 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?

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'll hear from us on the financials and operations given the current situation. Operationally, we're in a bit of an unprecedented place right now with the 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, 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 agreement. All of this, however, remains in flux pending the natural progression of the litigation.

In addition, the operations of TEGNA will be under the purview of the team at TEGNA rather than under Nexstar's day-to-day management. So given the number of variables, I'm sure you'll appreciate that for now, forward-looking guidance will be limited. We understand the market does not like uncertainty, so we're 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 is a public company, so there's plenty of comparable financial data for you to review along with the longer-term projections they provided in their proxy.

Now I'm going to turn the call over to Mike to provide some color on our results, primarily on the revenue side of the P&L, and then I'll return for some more discussion on expenses and capital allocation. Mike?

Thank you, Lee Ann, and good morning, everyone. As noted in this morning's press release and Perry's remarks, Nexstar's consolidated financial results for the 3-month period ending March 31, 2026, include 13 days of TEGNA operations, while the comparable 2025 period reflects only Nexstar'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, primarily due to $106 million of revenue from TEGNA and higher advertising and distribution revenue from our legacy business units.

First quarter distribution revenue of $837 million increased $75 million or 9.8% compared to the prior year quarter and primarily reflects $54 million of revenue from TEGNA and 2.8% higher revenue from our legacy business due to increased rates, growth in vMVPD subscribers, the addition of CW affiliations on certain of our stations and our local FOX affiliates participation in the launch of FOX One, offset in part by MVPD subscriber attrition. On a combined basis, assuming we own TEGNA for the entire quarter, distribution revenue increased 1.6% year-over-year.

Given what we are seeing in the numbers reported to us in the publicly reported subscriber counts from distributors, we are feeling more optimistic than our original plan for subscriber attrition for the year. However, as you know, we committed to the FCC in connection with the transaction to offer to extend current retransmission agreements until November 30 for MVPDs renewing with us before that date. Putting it all together, we do not expect a material change from the original distribution guidance we provided for legacy Nexstar.

Advertising revenue of $548 million increased $88 million or 19.1% over the comparable prior year, primarily reflecting $51 million incremental TEGNA advertising revenue and higher political advertising revenue. Excluding TEGNA revenues, legacy Nexstar nonpolitical advertising revenue was flattish and in line with our expectations, growing 0.4% as growth in digital advertising offset declines in nonpolitical television advertising. Top advertising categories in the quarter for legacy Nexstar 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 outlier in terms of positive or negative performance.

On a combined basis, nonpolitical 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, nonpolitical advertising is expected to decline mid-single digits due to a weaker advertising environment.

Legacy Nexstar and TEGNA both delivered strong first quarter political advertising revenue, driven by strong primary and early gubernatorial 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 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'll improve full year losses by more than 30% in the 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 6 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 audiences 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 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 broadcast and MVPD and vMVPD distribution while significantly extending our reach to new audiences and advertisers through ESPN Sports 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 coming 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, multi-platform distribution and digital partnerships to drive incremental value. At 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'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's my pleasure to turn the call back to Lee Ann for the remainder of the financial review.

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 onetime expenses related to cost reduction initiatives taken at legacy Nexstar. Excluding onetime expenses, first quarter recurring cash operating expenses were lower by $1 million for Nexstar's legacy business unit.

Q1 2026 corporate expense was $106 million, including noncash compensation expense of $20 million compared to $52 million, including noncash compensation expense of $18 million in the first quarter of 2025. The increase of $54 million is primarily due to $38 million of onetime 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 the first quarter of 2025, primarily due to timing of programming at the CW.

Q1 2026 income from equity method investments, which primarily reflects 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 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 pendency of and plans related to the TEGNA acquisition. First quarter net interest expense was $120 million, an increase of $23 million from the first quarter of 2025 due primarily to $22 million of onetime commitment and funding fees associated with the temporary bridge loans 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 the first quarter of 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.

As we received -- we also received an $84 million distribution from Food Network related to the 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 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 '26, 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 repaid $28 million of mandatory amortization payments on our debt. Nexstar's outstanding debt at March 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 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. In addition, our credit agreement allows us to include the adjusted EBITDA of TEGNA as if we acquired the business on the first day of the period presented to add back onetime 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 March 31, 2026, for the last 8 quarters annualized was 2.94x, which is well below our first lien and only covenant of 4.75x. Our covenant increased from 4.25 to 4.75x for this quarter and for the next 3 consecutive fiscal quarters after the acquisition as permitted under our credit agreement. Our total net leverage for Nexstar was 3.84x at quarter end using the same calculation methodology.

Subsequent to quarter end, we repaid in full our $150 million short-term, 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 '26 cash flow will be deployed first to fulfill our mandatory obligations, including debt repayments, pension and defined benefit plan contributions, our dividend and then optionally repay any additional debt with excess cash flow.

With that, I'll open up the call for questions. Operator, can you go to the first question?

[Operator Instructions] Your first question comes from Dan Kurnos with StoneX.

First, Perry, I appreciate your willingness to be as open and straightforward with us on the process. I guess first part of the question is, 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 guys 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 can't give guidance under the circumstance. I guess you're kind of directing us to look at what you have said publicly around '26 and what TEGNA had put out previously as sort of the yardstick, if that's right, that would just be helpful to get some clarity there.

Dan, I'll take the first part and then turn it over to Lee Ann. I think we gave you the complete laundry list of all threatened and pending litigation that we're aware of at this time. We're not aware of anything else that is in the offing. So I think you know everything we know in terms of what's in front of us at this time.

And I'll turn it to Lee Ann on capital preservation and the other aspects of your question.

Yes. I think, Dan, I think on the CapEx side, we just had a little bit of delay in the CapEx because we had anticipated some different strategies when we combined with TEGNA, but that will all catch up over the course of the year. So I think you can think of Nexstar as continuing to execute on our plan, doing as an excellent operational job as we normally do on a go-forward basis. We're completely dialed in and focused on executing on the Nexstar plan. And I think TEGNA similarly is focused on executing their plan. And we're not going to be providing any sort of longer-term guidance with respect to either company at this point.

Next question, Patrick Sholl with Barrington Research.

Just another follow-up on the M&A or I guess, the litigation. Holding the 2 companies separately, has that provided like any sort of like update on how -- like informing how you would want to approach operating them together and if the litigation is resolved successfully?

Well, 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 I think we have the ability to have conversations with TEGNA. Obviously, they are required and have done an excellent job of doing so even in the stub period of providing financial information so that we can present consolidated financials for all of the entities that we own. But other than that, I don't think there's any additional read-through in terms of how we'll operate things post Hold Separate Order. I think that plan is pretty well baked and in place.

Yes. I will just echo that. I think if and when we get this resolved, we will be executing on our plan as we had originally intended. So subject to whatever comes out of the process in the interim.

Okay. And then just in terms of just the general environment, like is there any sort of impact from the resolution of the tariff issue in terms of advertiser enthusiasm? Or has other events kind of offset some of any potential benefit on that side?

Not in particular, no. I think what we are seeing is a little bit of a weaker advertising environment in the second quarter than we did see in the first quarter. So I wouldn't say there was anything in particular with respect to the tariffs. I would also just remind you that we've got about 60% of our advertising is coming from services-based companies, which were not impacted by the tariffs.

Next question, Aaron Watts with Deutsche Bank.

Two questions. Just a follow-up on advertising. Dan, where are you seeing the softness amongst your large verticals as you look at 2Q, 3Q? And what's the messaging from your ad partners and how they're thinking about the ad environment right now?

Yes. So Aaron, there's really not any kind of one category or any major categories to flag. Mike in his comments gave you kind of our top and bottom categories, but there's not any sort of major differential. What I tend to look at is I look at our categories and I look at which ones are increasing versus decreasing on a quarter-to-quarter basis. And last quarter, it was about 50-50. In this quarter, it's about 2/3 decreasing and 1/3 increasing. So I think it's just kind of a general overall weakness. I don't think we have any particular aha moment in terms of any specific category. It's just across the board sort of general trend.

Aaron, I would just add to that saying that we have one large home improvement advertiser that has gone silent for a period of time that's 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 will be better on PIX and our ad sales will be better there. There's a lot of little things, but as Lee Ann said, I don't think there's any one big thing. I will say, as I was driving to the office this morning, and I drove past the gas stations that I pass every day and for the first time, saw a 4 handle to the left of the decimal point in terms of the price per gallon. And I think that is having some effect -- my understanding that people getting tax refunds that are at the lower end of the socioeconomic ladder, that money hasn't flown back into the economy at this point. I think people are holding on to that money longer and perhaps to see how things turn out in terms of oil prices and things of that. So I think there's just a conservatism at this moment in time, but I don't think there's anything overarching beyond that.

Okay. That's helpful context. And if I could get one more in. One 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. You outlined near-term 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's required station divestitures, synergies, et cetera, 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?

Aaron, we can't really necessarily comment on what might be, what could be. But I think our track record is that we really look to deleverage the business, use our excess cash flow to deleverage to get to -- we don't want to be overlevered. We know the public market appreciates lower leveraged companies. And so our focus is going to be to continue on that plan and with our historical track record of deleveraging post transactions. Clearly, we're still paying down debt in this environment. We've paid down $150 million optionally after the end of the quarter. And that's -- I think you're 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.

Next question, Steven Cahall with Wells Fargo & Company.

So you outlined some of the ways that you won't be able to integrate TEGNA. Can you talk about some of the things that you can do that are arm's length? I don't know if there's collaborations like 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, I just wanted 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 just think about how much of their cash generation would be available for you to sweep up for debt reduction?

Yes. I'm going to take that last question first, and then I'll turn it back to Perry on the first question. No, I just say excess free cash flow because we need to keep -- there needs to be enough cash at the operating companies to operate. We obviously have to continue to have an operation. So I just meant subject to a minimum cash balance requirements that we just have from an operating perspective. All of the debt obligations of the company are joint and several between us and TEGNA. So all the debt -- excess cash flow that we see fit will be used to repay that debt.

And I'll turn it back to Perry.

Yes. And Steve, I would say there are certain commercial agreements that Mike Biard and I have been talking about that we could enter into on an arm's length basis with TEGNA under the order, which could include and involve Premion. For example, in Houston, we contracted our CW station contracted with a station in the market to produce a 10:00 news, and we sent termination notice of that during the pendency of the TEGNA acquisition. So we could talk to the TEGNA station in Houston and/or our incumbent news producer in terms of establishing another commercial agreement to produce news for that station. So it's -- there are some things like that, that we can do. And I think we'll pursue those where they make sense during this whole separate period.

Next question, Craig Huber with Huber Research Partners.

My first question about the 39% ownership cap, I personally 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 was just give you guys a waiver and stuff. And there's certainly, as you know, have been some talk in the trade press, et cetera, about the FCC at the commission level potentially, I don't know, reversing out their approval of the deal and stuff. Can you touch on that at all, the first part about where you think we're at with the 39% ownership cap? Do you think it's ever going to get done? What kind of time line are we on here? And why do you think they didn't just change that first? And who cares for this extra couple of months to get that done first, then do the TEGNA acquisition approval for you guys after that?

Sure. Well, the TEGNA acquisition was approved. We do own the assets. So I want to start there, and we feel it went through a fulsome approval process at both the FCC and the DOJ, the 2 expert agencies that regulate this industry as opposed to the state AGs that have shown no real concern or support for local media, local journalism, local television until this election year. But I think that -- and I don't presupposed to be in the mind of Chairman Carr. But if you go back and look at public statements that he's made, since he was a commissioner, whether his party was in power or out of power, he has said these rules are antiquated relative to the past, and they need to go.

So he is consistent in that position, I believe, to this day. And I don't rule out that he will start a proceeding perhaps in this quarter or the next quarter that would be a rulemaking to eliminate the national ownership cap. Imagine if you were Netflix or Google or Amazon and you were told you could only reach 39% of the country with your business. I think there'd be some hue and cry around that. And so 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. And I think that Chairman Carr is totally aware of market realities why he's taking the actions that he has taken.

And so I think we are still on a path to regulatory deregulation, and we are very thankful that we were able to make a persuasive case to qualify for a waiver during the pendency of those proceedings. It's not just as simple as putting out a press release and saying the rules have changed. There's a lot of legal work that has to go into that, a lot of wordsmithing, a lot of consultation with advisers. So I don't -- I would not suppose or presume that those actions are off track. It's just there's obviously a lot going on, a lot of M&A in addition to ours, that is under consideration at the FCC and the DOJ. And so I just think it's -- I think these things are moving through the pipeline, but I would not presume that they have stopped or will not move through the pipeline ultimately.

I appreciate all that, and I certainly agree with that. But again, just -- it just seems like to me personally and things were done backwards here that they should have changed the 39% ownership cap first and then going through all the process to approve your deal as well, but to get that finalized after the 39% ownership cap was done. They didn't do that. And does that put you in a little bit tougher position here with these court cases out there that this thing closed on a waiver as opposed to the regulation changing first and then them doing all the due diligence and then approving it. What's your thought on that, please?

Craig, it's Mike Biard. I'll take that. I don't 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 purview. They come from an antitrust perspective, which is really a different analysis entirely than the FCC. I think the FCC could have yielded a waiver, 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.

Next question, Benjamin Soff with Deutsche Bank.

I had 2. First, I wanted to ask about the partnerships with ESPN and Roku. Does this represent a shift in Nexstar's digital strategy? And how are you thinking about balancing growing your digital business versus the opportunity to partner with other platforms? And then on divestitures, I appreciate there's a lot of uncertainty right now, but can you help us think about how a potential divestiture would impact the synergy buckets you've outlined, whether it's retrans, corporate overhead or operational efficiencies?

I'll take the first question. I don't think it represents a shift in our thinking. I think -- and I'm speaking with respect to the deals that we struck with ESPN and Roku. We look at those as less of a shift and more of an evolution, right? I think 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 look at essentially the long history of losses associated with that. Those businesses are hard to build. They're capital intensive. They require a lot of ongoing maintenance.

And so when we looked at expanding our footprint in a digital environment, we essentially had 3 options available to us, right, build, buy or partner. And I think for obvious reasons, we went with the latter of those options, and we were able to strike deals with essentially the largest platforms available to us in each of those spaces. So particularly with respect to CW and the sports on ESPN, I think 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 and a dedicated CW vertical environment will reap rewards for us, not just in terms of building the brand equity, but also our ability to monetize viewership on those platforms. We're extremely excited about that.

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

And then on the divestiture side, Ben, I mean, it's premature. I think if you were to look at our synergies, there were a number of components to that. I think the -- obviously, retrans and in-market synergy type -- synergies would have to be reduced. Corporate, maybe not so much, but we'd have to take a look at it. It's, I think, a little premature to kind of even think about what that impact could be.

Next question, Jason Bazinet with Citi.

In all my years, I've never really come across a situation where shareholders own an asset and can't manage it. I just had a quick question. Can you elaborate on those guardrails that you talked about earlier? And second, is there any incentives that exist on the part of the TEGNA assets to sort of eat it for their sales force or anything else that sort of minimizes the risk for Nexstar shareholders in this period where we're sort of in limbo or suspended animation?

If you go back to the interim operating covenants, and it's now public in the order as well, they're primarily financial transactions above a certain size would have to be approved by the Board of TEGNA, which is comprised of Nexstar executives, and Nexstar management team, and that's been approved by the courts that -- and so -- and we have the ability to appoint management inside of TEGNA. And so I think all of those things taken together are the governance that will guide us during this whole separate period. And so they operate as a subsidiary. We can have conversations with them, the executives running the entity report to the Board.

We just can't basically influence decision-making. But again, decisions beyond a certain level require Board involvement and Board approval. So we were very comfortable in the way TEGNA was operated during the pendency of the transaction from the time of signing to closing. And so it's basically those same covenants, if you will, govern our relationship with TEGNA during the whole separate period. And as to sales, I'm not quite sure I understood that part of the question.

Well, I just get nervous about somebody at TEGNA, they don't really know if they have a job or if they're going to get eliminated in some synergy number and they get distracted and so they're not as focused on their core day-to-day job and then the sales numbers fall apart on the TEGNA side of the house. But I guess it sounds like from your answer, the limitation is more around integration, and there's really not a lot of operational day-to-day risk that Nexstar shareholders face on the TEGNA side of the house.

I think that's fair. And I think that if you read the judge's Hold Separate Order, we are not and TEGNA is not allowed to reduce headcount during the pendency of this TRO. So at this point, we were comfortable in the results and the performance of TEGNA during the pendency of the transaction when we were operating under the same structure that we're operating under now. And so we have -- and prior to closing is when anxiety is at its highest, right? And I would say that in the overlap markets, would have been on our side of the ledger as well. If there are 2 of me, how -- what assurances do I have?

And I think people are -- look at the environment around them and look at the layoffs at Meta and other companies and going on. And so I think everybody is likely concerned about their job, particularly if they're not doing a good job. And so I don't think that this transaction, this industry or these 2 companies are immune from the world economy. So from that perspective, we track our levels of attrition and did not see any appreciable changes during the pendency of the transaction.

We'll continue to track levels of attrition during this Hold Separate period to determine if there are trends, but we haven't seen it thus far. And I would say that the TEGNA results for the first quarter were very -- were excellent. We only got the benefit of 13 days of them, but we obviously had the financial information for the entire quarter, and they performed very, very well as did Nexstar by the results we reported this morning.

Yes. I would echo that. I would say the first quarter, if there's any expectation or indication that we'd have a problem, you would see it most likely the first quarter number and TEGNA definitely had a stellar first quarter.

I will now turn the floor over to Perry for closing remarks.

Well, 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. Thanks, everyone, and have a great rest of your day.

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

Good morning, everyone. My name is Benjamin Soff. I'm the equity analyst at Deutsche Bank covering TV broadcasters, and I'm very pleased to be joined today by Nexstar's Chairman and CEO, Perry Sook; and CFO, Lee Ann Gliha. Thanks for being here.

Thank you for having us.

You reported 4Q earnings a couple of weeks ago. Looking back to 2025, what were some of the highlights for Nexstar? And what are your key priorities for 2026?

Maybe I'll kick that off. We had, I think, really good 2025. We had record odd year revenue, which was fantastic for us. We had -- in the fourth quarter, we actually generated a positive 4.5% growth in our nonpolitical advertising revenue, which was an improvement from what we had thought at the time when we did our third quarter earnings, which was a positive signal regarding the advertising market. Again, in 2025, we were able to reduce our overall operating expenses by being very focused on making sure that we were streamlining operations where we could. And so we were able to actually reduce costs benefiting the bottom line.

And then going into 2026, we're very excited about the opportunity that is coming for us with respect to the TEGNA acquisition. But beyond that, in 2020 -- at the end of 2025, we renewed about 60% of our distribution deals representing 60% of our subscribers. And so we will have the benefit of that going into 2026. We're looking forward to the election cycle. Generally, we generate about $0.5 billion of incremental revenue during those -- the last 3 cycles. So that is a positive for us going into the year.

And then this year, in particular, we're -- we continue to be very, very focused on digital advertising revenue growth. And that's been something where we were able to just take our local sales force and not only sell our own digital inventory, but sell third-party digital inventory as part of audience extension strategies. And this year, we expect to have digital revenue that should surpass our national advertising revenue. So that will be better for our long-term trajectory. And I apologize, I've got a little bit of a cold as you can tell.

That's a great summary. And we're going to get into a few of those topics. But I wanted to start with deregulation. We've had a number of developments recently on the regulatory front. The President posted on social media in favor of your deal. Congress had a hearing in February to discuss refreshing the broadcast rules. And it sounds like your conversations with regulators are progressing. Can you provide us with an update on the deregulation process? And do you have a view on where we might see a potential rule change?

I think the administration is committed to deregulation and particularly at the FCC, the Chairman, Chairman Carr is committed to moving forward with eliminating outdated and useless rules. And I think that the national ownership cap and the local ownership rules fall into those -- that category. As you know, any rulemaking today has to go through the OMB, which on the rulemaking to eliminate the national ownership cap, should the Chairman decide to move forward on that soon, which I believe he will, it will go to the OMB, which will be take 30, 60, who knows how many -- maybe 90 days at the outset for them to review the impact on budgets and the economy and all of that.

Then you can move forward with that relatively quickly. Same with the local ownership rules, they've gone through the notice of proposed rulemaking or request for comments. And so comments reply comments. The pleading cycle is over for that as well. And it's now just a question of when those become actionable at the commission level and then could be turned into regulations. And so I think that those things will happen this year. It depends on how long it takes to clear OMB to before then they could be acted upon.

You're currently working through your pending acquisition of TEGNA. What made this deal so strategically important? And how does it position Nexstar to compete more effectively, especially as we see consolidation pick up across broader media?

Well, as you know, there were a number of potential M&A conversations going on about this time last year, and there were a few companies in the marketplace looking to sell or decide what they wanted to do. And as we surveyed those opportunities and what they could mean to Nexstar, it became relatively clear as Lee Ann and I did our analysis that the highest and best use of our capital and our time would be to attempt to acquire TEGNA. It was the biggest of those opportunities out there, probably the best run and also had the best balance sheet.

So it was merging two companies from a position of strength or acquiring two strong companies, putting them together and everything else would have been kind of a mismatch of strength and weakness potentially. It increased our size, both in geography, in national reach and in financial wherewithal more than any other. And at the end of the day, we were able to negotiate a transaction that will be roughly 40% accretive to our shareholders. So it's absolutely work worth doing and why it was the best strategic fit for us. We thought the cultures at the operating business level are roughly similar. There are things that we like that TEGNA is doing that we're not executing to that level in Nexstar and vice versa. So we literally think it's putting the best of breed and best practices together under one roof.

Remind us when you expect to close that deal? And where are you in that process?

Sure. Well, I mean, we're engaged in active discussions with both the DOJ and the FCC. We are permitting them to talk to one another, and that's usually so they can coordinate on process and timing and decisions as we get toward making the -- earning final regulatory approval. No one agency wants to be too far out in front of or behind the other. So we view all of those as good signs. We have said it will close, and I guess I should be clear on this, so there is no confusion. We expect the transaction to close before the end of second quarter.

You have a pretty good track record of creating value for shareholders in your previous broadcast mergers. Remind us what you're expecting for synergies in the TEGNA deal? And is the broadcast M&A playbook evolving now that it's theoretically possible to create in-market duopolies?

Yes. So we put out a target or we had -- in connection with the announcement of the transaction, we said that we had estimated there would be about $300 million of synergies based on the 2025 estimates that we had at the time. And that really is a combination of net retrans synergies and operating expense synergies. And as a percentage of the EBITDA, it's very comparable to what we have been able to achieve in the past in terms of Tribune at the prior transaction, which was about 35% of EBITDA.

The focus on the expense synergies in terms of the end market is that it does -- those in-market synergies are really the lion's share of the operating expense synergies. And that really is beneficial because there's 35 of the 51 markets are overlap markets and are going to enable us to really create better operations in those markets. And that -- we're no stranger to having more than one station in the market. Over 50% of our markets are duopolies today. And so the difference here is just that we have 2 potentially big 4 affiliates in each of these markets that would be incrementally helpful because there's just more operation there to deal with.

Harry, you just said you expect the deal to close by the second half of 2026, by the end of 2Q. That's coming up in just a matter of months. So I want to take this opportunity to ask how you're thinking about capital allocation post close. And in particular, how do you think about balancing the priorities between delevering the balance sheet versus being opportunistic if and when the ownership rules are rolled back?

Well, I think that we have been pretty public about our opening leverage pro forma for the transaction being roughly 4x. We are currently today at the lowest leverage point in our company's 30-year history. So levering up to 4x, I remember when we used to want to lever down to 4x within 24 months after closing the acquisition. So different time, different world. But again, that speaks to the strength of our balance sheet that we can make a $6-plus billion acquisition without any equity and lever up to 4x the trailing LQA EBITDA.

And so as we look forward, there are other -- those 2 processes I spoke about at the beginning of our conversation are still available, right? They're kind of back in the queue. And so there are opportunities there. But I think it's going to be governed a lot by our leverage. If we delever by 0.5 turn, I mean, that creates an incremental $1 billion plus borrowing capacity just on our balance sheet to still remain below 4x before we lever the acquisition target. So there's opportunity out there, but it's got to be an accretive deal. It's got to be an actionable transaction. There's got to be industrial logic and it's got to be, as I said, substantially accretive to our shareholders over buying back stock. So our filters don't change.

It's just, obviously, we see -- because this administration has been so pro deregulation, we wouldn't be attempting the TEGNA transaction in the previous administration. It is President Trump and Chairman Carr and our Attorney General that are supportive of moving forward to develop a strong local antidote to big tech incursion into our businesses and our daily lives here. The bigger we get, the more level the playing field is on a local market basis of trying to compete against them and maintain local journalism, which is really what we're all about.

Pivoting to the core business. We've been seeing the pace of pay TV subscriber declines moderate over the past year or 2. And it seems like that's beginning to have a positive impact on your business. What do you think is driving that improvement in sub trends? And what are the implications for your distribution revenue?

Yes. So we're really happy to start to see some positive momentum in the reduction of the rate of decline in the pay TV universe. We think this is really due to a variety of different things. Number one, we did some work with a consulting firm, Altman Solon a number of years ago, where we really just looked at what percentage of the pay TV subscribers really had no interest in news or sports, which are the 2 main components of broadcast television. And those folks that are not interested in those categories are mostly out of the ecosystem at this point. So the rate of further attrition doesn't really need to continue to increase given that those folks are gone. So that's point number one.

Point number two is we've seen companies like Charter do great things in terms of making their packages more beneficial to the consumers. Charter went around and rebundled all of these direct-to-consumer services into their core package and are providing the consumers with a much better benefit for the cost that they're charging them. And so as a result, you saw Charter actually sequentially from Q3 to Q4 show growth in number of subs. And the rate of that sort of improvement has been great. I went back in time and I graphed over the rate of decline has been a long sort of rate of decline, but now the recovery seems to be happening pretty quickly. And so that's going to be very positive for us.

We've also seen the advent of some skinny bundles out there that are really focused on broadcast and news in which Nexstar is a core component of those offerings. And so all of those things together, we think should have a positive impact on the rate of pay TV attrition going forward, and that will be positive for our stability of our top line distribution revenue.

You just completed a major round of distributor renewals for 60% of your base. And you have another 30% renewing later this year. Talk about your pricing power in these renewals? And in particular, what are the factors that allow you to capture price increases to offset subscriber declines?

Well, first and foremost, these are all market-based negotiations and two parties have to agree on a deal or there is no deal. So we've always been a leader in generating distribution revenue from our portfolio. We began to generate revenue from CW and My Network stations, I think, before they were in the main. And so we're always looking for opportunities to advantage our company and improve our offering to the consumer, whether it's through diginets, fast channels or additional adjunct to the pay TV ecosystem.

So and again, I have been involved in those negotiations either directly or now through a kind of a supervisory role. And I think the CEO's impact has some value there. I'd like to think I have. I mean we've been able to generate sustained growth in distribution revenue and have been able to outrun the rate of attrition even when it was at its worth and show net retrans growth.

And I think we're still in a position to do that. So one of the areas -- one of the happy byproducts of the CW acquisition is we were able to convert a number of stations that were either independents or of some other de novo affiliation to CW affiliates in our portfolio that generated substantial distribution revenue increases by having them stations under our contracts and having them become affiliated with the CW. We don't count any of that against the CW road to profitability, but it's been a substantial double-digit millions increase to our revenue base for those stations.

You recently guided to low single-digit distribution revenue growth and mid-single-digit net retrans growth for the year. That implies net retrans margins are expanding. What are you seeing across the reverse compensation landscape? And what does that mean for net retrans over time?

Well, I think that when we sit down with our Big 4 network brethren, one of the first conversations in the distribution renewal for affiliations is I pay you for the product, the programming, and I also pay you for exclusivity or have historically the fact that this programming is less and less exclusive in my geographies, it's worth less to me. So once the bid and the ask are established, we can actually sit and have a negotiation at that point. But I think you're seeing for us, and again, by virtue of those CW affiliations moving into the Nexstar umbrella and Nexstar Tent, you're seeing us continue to grow distribution revenue. I think you'll continue to see downward pressure on that expense line in our P&L and as a product that the margin will continue to incrementally grow better for us.

Switching to advertising. You posted healthy growth in nonpolitical advertising in the fourth quarter, and you guided to flattish growth in 1Q. Can you give us some more color on the trends you're seeing across your advertising business?

Yes. So fourth quarter, just to remind people, was also positively impacted by the lack of crowd out. So in political years, in the third and fourth quarter, mostly the fourth quarter, there's a negative impact on our sort of traditional nonpolitical advertising revenue because we're just allocating so much to -- of our inventory to political. But what we saw kind of in the back half of the quarter really was more later buys than what we had typically seen, and we've seen some large advertisers kind of come back in the market that we weren't expecting.

And we really saw kind of across the board, positive momentum across all of our different advertising categories. In the first quarter, we anticipate flattish in terms of the overall growth or lack thereof in the first quarter, which we still think is a positive signal. We haven't really had anything major be outliers with respect to categories. We've got -- auto is doing -- is less of a negative impact, and we've been really working hard to develop our digital solutions for the auto category, which have offset some of the pressure on the TV side of the business. So we're feeling like there's not really kind of any major standout positive or negative with respect to categories, but we're feeling that the market is just fine in the first quarter.

We obviously have a midterm election coming up later this year. That should be a big tailwind as usual. Can you remind us what you're expecting for this election cycle and what share you think Nexstar can capture from within the overall pool?

Yes. So our political expectation for the year is that we will do like a low double-digit percentage of whatever is ultimately spent on broadcast television. We can, we have -- because our portfolio is so broad, we generally are in 80% to 90% of the contested election markets. You pretty much can be sure that we'll collect a decent percentage of the political advertising because no matter where there's going to be a contested election, we're usually there. And so in the past few election cycles, as I mentioned earlier, we've generated about $0.5 billion of incremental revenue. And so we'll -- what we end up doing this year will be dependent on what actually gets spent in broadcast.

You mentioned digital a minute ago. That business grew high single digits in 2025. And you said you expect digital advertising to surpass your national business this year. Can you provide some more detail on your digital strategy and the factors driving growth in that business?

Yes. So digital, if you think about it, is really broken down into a couple of different components. We've got our sale of digital inventory that is our O&O inventory. So that will be our websites, our apps, the CW app. It will be the NewsNation app. It will be videos that we are able to monetize on third-party platforms. And then the other component of our digital revenue is selling third-party services. So to the extent that we can utilize our really great sales force to sell additional inventory, we've got an advertiser, we've got a relationship with them. They love the news product, but maybe they want a little more entertainment or they want something else. We can go get that and create it as an audience extension strategy for them.

And that business has been really something we've been leaning into and at the local level has been growing kind of high single, low double-digit rate of growth, which is really kind of benefiting our overall digital breadth. That's a little bit counterbalanced by we've had some reductions at the CW, and that's by design because we've changed the programming there to be more focused on broad-based and sports programming, which is not as attractive in the OTC environment.

TEGNA has its own digital business, Premion. I know it's early, but I wonder how you see that complementing your platform.

Yes. So I think what's interesting there is right now, we use a third-party service to access third-party CTV inventory. They obviously own Premion and they have their own DSP, which we think is -- can be competitively advantageous. And so we think by putting our inventory together with TEGNA's inventory in the local market could really help us be more focused on that segment of the business, reduce the ad tax because we've got our own DSP and really drive growth by providing a bespoke service to our customers.

You recently guided to around $2 billion of EBITDA this year. We talked about some of the revenue drivers, but it sounds like you're working on some initiatives to bring down expenses as well. What are some of the areas of the business you're focusing on? And can you help frame for investors the potential impact from these initiatives?

Yes. So we are -- every year, we kind of just relook at our budget and lease. I think we're a little bit unique in that we do almost like a bottoms space zero-based budget where we kind of go back and we say, okay, can we be doing things better? What are we doing with spending with these vendors? How can we really kind of rationalize our costs and make sure we're doing the things that are the most efficient for the company.

And so the last couple of years, we've taken a couple of different actions to really try to benefit from the scale that we have and really take advantage of looking at where best practices are. So this year, we're doing a few things like we have some very, very large organizations in our large markets that don't probably need to be as large as they are in order to generate the revenue that they've been able to generate. So we've taken some actions there.

We're doing some additional consolidation of our marketing departments. Do you need to have creative people in every single market? Or can they be in the hub and so these are the types of things that we're realigning the sales compensation a little bit to be more focused on what driving and being compensated on what we are trying to achieve. So there's a variety of different actions there. And we do expect our overall expenses. So if you take -- I'm just -- when I say overall expenses, I just mean everything, direct ops, OpEx, SG&A, corporate, amortization of programming costs to be down, not a huge amount, but low single digits year-over-year in 2026.

We're also using AI in early days to reconcile payments and invoices. We think we can use it to streamline the research function and journalism to bring productivity enhancements, if you will, that ultimately could lead to either a rotation of jobs into either revenue or content creating as opposed to support functions, but also just overall efficiency of transaction friction and things like that.

So early days, we're also trying to develop a tool that will allow a reporter while he or she is creating a story that would say, have you considered this context, this appears to be -- this adjective appears to be biased in one way or the other and just something that could give the reporters more to think about, not to dictate what they write, but to say, is crime up or down in D.C. Well, it depends on what statistics you look at and how you frame the discussion, again, to drive toward that North Star in the company, which is unbiased and objective reporting. And so those are all things that are productivity enhancements that are part of this overall impetus to continue to do things as efficiently as we can while maintaining and improving even the quality of what we do.

It's been a few years since you acquired the CW and you've since revamped the network's programming strategy. Live sports now account for almost 50% of the slate. At the same time, you've reduced operating losses in that business pretty meaningfully. Can you reflect on the progress you've made with the CW and talk about how that asset fits into the broader Nexstar portfolio?

Sure. Well, our interest in the CW was -- started with the fact that we were the largest distribution outlet for the CW. At that time, 35% of the U.S. was delivered by Nexstar stations. That number is now 50%. So for us, it was anything that can improve, the CW can improve the fortunes of those stations. And I think that's a fundamental difference. We approach the network is how can it do more for our stations as opposed to a network top-down approach. And so in addition to the distribution value that comes from being a part of the CW and Nexstar, we've given 800 hours of sports to stations that have never had -- been able to compete for sports dollars in their marketplace either locally or nationally.

I think we've got most of the embedded overhead costs through the system. There's some money that was spent early on and prior to our arrival on content to drive app views for the CW that proved to be unprofitable. And we're -- as those agreements unwind, we're kind of letting them go. I think at this point now, it is improving distribution, improving distribution revenue. We're not on in this hotel, for example. It is looking for opportunities to expand our sports portfolio and continue to refresh that product. Selling sports better. I mean we know what the gap analysis is between the number of eyeballs we deliver among all of the networks and the number of dollars we receive on a percentage basis.

And our job is to close that gap and then continue to drive the top line. So most all of the high dollar program expense is through the system. We're in the last year of a legacy agreement. And what we're finding is the things that perform very well for the CW for us in terms of building a linear and digital audience are obviously sports on the linear side. And the game shows. We are doing trivial pursuit and Scrabble, and Scrabble is now hosted by Craig Ferguson, who used to host the late show on CBS and his hosting ability as well as his name recognition has helped us to grow that game show now to 0.5 million viewers every time it's on. And it didn't hurt the fact that coming out of an ACC football -- I'm sorry, a NASCAR race, we aired an episode of that as the prime time show started our night that night. So that flywheel is beginning to work to our benefit.

So the game shows, our police shows, obviously, wrestling works very well on Tuesday night. And so just building those green shoots that we can continue to build on. And so the bar is higher now. It used to be 3 -- 300,000 was a good night for the CW in terms of total viewers. Now anything less than 0.5 million is kind of a disappointment for us internally. And so we need to continue to raise that bar because there are nights that we beat the big 4 networks or one of the big 4 networks in an hour and I think all of last year, that happened a few times. It's happened in 2025, like maybe 5 dozen times. And so our job is to make sure that's a much more regular occurrence. And that's just trying to grow our audience in a mature environment. And with both NewsNation and the CW, we've been able to architect a story of growth in a very mature operating environment. So we're kind of a positive outlier to that effect.

Speaking of NewsNation, in recent years, you've achieved wider distribution and healthy growth. Can you talk through some of the recent wins for this business and your vision for NewsNation going forward?

Sure. We just recently, in February, expanded our live programming to 18 hours a day, Monday through Friday. So we're only in repeats overnight like every other cable network is, and we cume those talk show numbers, and that's what we sell into the advertising marketplace. Same story there. If you look at February over February, we're up 40% in total viewership and in the 25 to 54 demographic. And we keep track of the number of times that we beat one of the legacy cable news networks. And again, I think in 2024, that happened maybe 30 or 40 times. In 2025, that happened over 240 times. And so it's, again, green shoots showing our opportunity to continue to break through.

I think it's our objective reporting, our unbiased reporting, the fact that we're live in news on the weekends when some of our more mature legacy competitors are in taped programming. So when things have happened on the weekends, we've been there live, and we're seeing that people are turning to us now for breaking news. And our audience grew during the State of the Union. They didn't abandon us for a legacy cable news network. So again, our job there is to continue to grow that audience. If I can do -- put stack 40% on 40% for a few years, and now we're rivaling some of the networks that have a 25- to 50-year head start on us with building an audience with viewers. So we're very pleased. I'd say I've made a career being often pleased but never satisfied. And that's the same for NewsNation. But I will tell you that we are very pleased at the growth that we're seeing recently, and our job is to make sure that streak continues.

It sounds like the NFL negotiating window could be opening up later this year. And given how important that programming is to the broadcast ecosystem, I wanted to ask if you had any thoughts or predictions on how that might shake out.

Well, sure. I think that the NFL is going to get their collective bargaining agreement done, so they know whether they have an 18th game to put into a package or whatever. Having said that, I think that each of the legacy networks has a perfectly good binding contract through 2029 -- [indiscernible] season. And so I think there's no catalyst to tear that up unless there's an incentive to tear that up. And I have been negotiating NFL and what that means to Fox affiliates or for Nexstar since the first NFL deal on Fox for the 94 season.

And there's always -- we're paying for this, we want you to help. And affiliates have contributed roughly in totality, 15% of the right speed that the networks paid for the NFL. Collectively, the affiliates have deferred, which kind of tracks what we get about 10% of the inventory in an NFL game. So I don't see any of that changing. And so I think that in an ordinary course negotiation for the NFL, they begin to talk about a new contract 18 to 24 months before the current contract expires, which means for a '29 expiration, they begin to talk about it in 2027. So maybe we're 6 months early to when that would normally start. So I don't know what the outcome will be.

I would predict the outcome would be that the big 4 networks would retain their legacy packages that games could get skimmed out of that, not reducing the total number, but CBS on the 1:00 game on a Sunday could have 7 different games going out to different parts of the country or 5. Maybe now it's 4 because one of those went into an international package that comes on the air at 9:00 or 8:00 on Sunday morning, which is hard for local stations to clear because they're in news or contracted religious programming or something of the other.

But I think the downstream effect is if the costs go up on a step function to the networks that each of them may be looking to rationalize their entire sports portfolio to pay for that, and that could create opportunities for the CW and our local stations. And this happened with NBC during the 2024 Summer Olympics from Paris that they literally had no room for some of their NASCAR telecasts. And so they sublicensed to us on a very attractive basis, 7 races that we were able to use to get NASCAR up and running on the CW. And so whether it's through the linear packages or the digital packages, I think you'll see more opportunities for us to co-venture, perhaps joint venture, perhaps windowing certain assets that creates more original supply for the CW and our local stations, both of which could be a downstream benefit to Nexstar.

And to wrap up, I wanted to ask about ATSC 3.0. It represents one of the more exciting levers for longer-term growth for your business. Can you talk about the progress you've made with ATSC to date and how you think about the path towards commercializing that opportunity?

Well, we are receiving money for commercialization of our spectrum right now. We're part of a 4-company consortia called EdgeBeam Wireless. We have a very good CEO of that business that is based in Boston, and we're receiving money now for commercial uses of our spectrum, high-speed data transmission. And it's not life changing. I wouldn't buy everybody in this room lunch at this point, but it's -- money begin to flow. And there are any number of proofs of concept out there, whether it's lower-cost 5G network replacements or location-based, whether it's precision agriculture or fleet management using our GPS to auto correct a terrestrial GPS system, connected car entertainment and navigation.

And so there are any number of those kinds of applications. And I think as the FCC moves toward first eliminating the simulcast requirement, which we're there on that, I think, eliminating ultimately the 1.0 carriage requirement, which would then cause the set manufacturers to have to design the 3.0. I think right now, Sony is the only set manufacturer that puts 3.0 tuners in every one of their sets. It could help bring the consumer market along. But quite honestly, the monetization opportunity is in B2B and not necessarily B2C. I think we could provide as an industry, a backup GPS system for the United States. And we're the largest industrial and maybe even the only industrialized country in the world that does not have a backup GPS system.

Now most other countries have two satellites in the air, one primary, one backup that could both be taken out by the same dirty bomb. If we were providing a terrestrial-based system, it's, we think, superior, and we've done a lot of work on, GPS is all about timing. And so we have our own atomic clock, and we're in sync with NIST, which is in Colorado with one of our full power stations. That's a translator to our Denver stations that we're using to and we've shown that our performance is, far exceeds the standards for GPS.

So this is a viable alternative, a national benefit, the President and the Department of Transportation, I think even DoD have all weighed in saying a backup GPS system is the national benefit for the country. It's now just campaigning to get our technology and our system approved and that not only would we be paid for it like the current GPS system is paid for, but we would provide a national benefit, a public interest benefit by using our spectrum assets, which I think is obviously in the country's best interest.

That seems like a pretty good place to wrap it. Thanks, guys.

Thank you for having us. Appreciate it.

Appreciate it.

All right. We're going to get started here. Thanks for joining us on day 3 of the Morgan Stanley TMT Conference. My name is Sean Diffley from Morgan Stanley Equity Research. For important disclosures, please see the Morgan Stanley Research Disclosure website, and if you have any questions, please reach out to your Morgan Stanley sales rep.

Perry, Lee Ann, good morning. Thanks so much for joining us again this year.

Thanks for having us.

All right. So we want to get right into it. I think first question I wanted to turn over to Lee Ann, you guys just reported your full year 2025, you had nearly $5 billion of revenue, over $1.5 billion of EBITDA, almost $1 billion of free cash flow. This represents record top line performance compared to prior odd years and continues to highlight the strength of the broadcast medium. Maybe you could talk about what separates your business from cable networks and streaming services in terms of both value and growth potential?

Right. Yes. And by the way, 2024 was also a record year for us in terms of revenue. And we feel like we are -- if you look at the overall -- the overall media landscape broadcast is the area that continues to perform. And why is that? I think it's for a number of reasons. I think number one is that we have the most watched programming on our stations. We've got the broadcast networks. We've got our local news. We've got very, very highly watched programming. And that really is also benefited by our distribution model.

Our distribution model is we are everywhere. If you want to see broadcast television, you can come to Nexstar and see it because we are going to be on every platform that's out there. We're on pay TV, we're over IP. We are also available over the air. And over the air is what really provides broadcast in general with an advantage because we've got an additional, call it, 15% to 20% of the country that can have access to our content.

And we've seen all of that really kind of be reiterated in terms of the benefits with just all of the viewership numbers that you've seen over the last year. I mean, the sports, in particular, NFL had a record year, NBA now with their programming now being on the NBC was up 16%.

We're even seeing it with our own programming at the CW. Overall, the CW Network was the second fastest-growing network in 2025. So all of these things are kind of compounding and really benefiting us with respect to our revenue and our bottom line.

Excellent. We're going to get into a bunch of those things. But I want to talk about the TEGNA merger. So a few weeks ago, President Trump publicly endorsed your deal. Perry, how has that impacted the approval process? And what are the other impediments that you have to work through as you work towards your second quarter close?

Well, I would say, certainly having the endorsement of the nation's Chief Executive doesn't hurt in the regulatory agencies. And so I think that has brought focus to the transaction and focus on the benefits that will come from putting the transaction together.

We are in active discussions with both the FCC and the DOJ. I think at last count, we provided over 2 million documents to the DOJ pursuant to their second request. And so we are highly engaged in those discussions. I have seen the filings we've made and the economic studies we provided, it's very good information that provides rationale that the definitions of markets and the definition of video certainly needs to evolve with the times.

And I think that, that will happen and our transaction will get approved, and we still stand by the -- in the second quarter or by the end of second quarter, our transaction, we expect will have cleared the approval process, and we fully intend to close as soon as we have that approval.

Great. And what divestitures, if any, are you expecting to make to close the deal?

Unclear at this point. What we have said all along is if divestitures are required and that if is still a part of the sentence is that we think they will have de minimis financial impact on the overall deal. But that has yet to be determined in any definitive fashion.

Great. And you've spoken to $300 million of EBITDA synergies, most of which within the first 12 months post close, what are some of the pockets of value that maybe you aren't quantifying as you see as like potential incremental opportunity?

Sure. Well, there's -- we have -- we will overlap operations in 35 markets, which means we start with 2 facilities. We will only need in most cases, one facility. So there will be a downstream potential of additional synergies from facilities consolidation as well as real estate sales.

It won't be anywhere near the number in the Tribune transaction of net proceeds from real estate, but there is something there, and we will quantify that as time goes on, but none of that was in the original synergy calculation, which, as you pointed out, those are synergies that will be realized by and large, in the first 12 months.

Great. And I wanted to ask the time line for lowering leverage following the deal.

That's a CFO question.

Yes. We're going to -- if you just look at our history, what we've done is we've -- after every major transaction, we've levered up a little bit, but then we've used all of our excess cash flow to delever the balance sheet. And so if we do that, which we anticipate to we will, we should see leverage back to kind of where we were before we announced the transaction sometime in 2028.

Great. So obviously, TEGNA at the forefront, but investors are always wondering what's next. So when that -- if that deal or when that deal closes, you'll be approaching close to $3 billion of EBITDA. So what -- where do you go from here? What is the focus? Is it in terms of just O&Os and CW and other broadcast? Or do you focus on other adjacencies? How should we think about kind of the next play beyond TEGNA?

Well, we've chosen to found and build the company, which turns 30 years in June in the local end of the pool. And that's -- we will continue to focus on the local end of the media ecosystem. We think it's much more durable than others that are much more exposed to national while we have certain national assets, but the vast majority of our revenue and EBITDA earnings will come from assets that are in our local markets.

And Lee Ann explained a lot of the reasons why we chose that area. It's durable. It's the least sexy but the most sticky part of the media ecosystem. So I would think we will always look to expand our footprint of local television stations, but there's also different kinds of digital video assets that -- in local markets that could potentially be of interest.

Everything has to be at the right price and has to be highly accretive. But we have a cable network and we have a broadcast network. We'll always be opportunistic, but I think our focus will continue to be local.

Great. So I want to talk more broadly about the pay TV ecosystem. So it does seem like options are moving in the favor of the viewer, packages coming bundling with streaming services and the proliferation of skinny bundles.

As you flagged on your earnings call, Charter, who will be here today, posted sequential growth in video subs for the first time in a long time. Can you talk about pay TV sub trends as you see them? Where do you see them playing out as we move across 2026?

Yes. I mean, this has been something we've been talking about for the last few years in terms of belief that we're going to see some stabilization in the rate of attrition of subscribers. That's for a variety of different reasons. One is that we've gotten down to a point where it's -- the people that were really trying to get out of the ecosystem are now out of the ecosystem. And so we see some stabilization.

We've also seen the great things that companies like Charter have done to rebundle and create more value for the consumer by bringing back in those DTC packages and putting it as part of their overall subscription. We're now seeing the advent of these skinny bundles like YouTube is launching one that is going to include broadcast and news. So those are things that should be able to create some stability for the pay TV ecosystem.

And we're excited to see the Charter numbers, I graphed out the decline, and it was sort of a big decline for a long period of time, but now we're seeing that come up has been pretty dramatic in terms of the quickness of the recovery. And so we're bullish about that.

We have not seen it quite yet in our numbers, but we do, in our distribution guidance that we put out in connection with our earnings call, have expected that we will have some rate -- some level of improvement in 2026 as a result.

Excellent. I want to turn to retrans. How are you thinking about retrans negotiations to shake out in 2026?

Well, in 2025, we had about 60% of our subscribers up for renewal. So those contracts are done and those will benefit primarily 2026. And so we -- our guidance includes that. We do have some additional -- we have about 30% of our subs up for renewal in 2026, which are more towards the middle to the end part of the year. And so we feel like we will be able to successfully navigate those negotiations and really get the benefit of what we bring to bear to those companies.

Great. And you've previously suggested there's maybe one more kind of cycle of retrans price increases before leveling off. Does that idea still hold? Or do you think the TEGNA merger could actually give you enough leverage to support retrans growth for a longer period of time?

No, we still think that that's kind of the horizon. It's all about the broadcasting ecosystem getting its fair share of the distribution dollars, viewership in, value out, and I think we've got one more round until that gets pretty close to a terminal velocity.

As the bundles get skinnier, and we're in those skinny bundles, you could make a case that more of that money would rotate toward viewership. But we still believe that, that's the general thesis that there'll be one more opportunity -- cycle of opportunity to get to our fair share and then I think things will fairly level off after that.

Great. And on reverse retrans, are you seeing better reverse retrans trends now that a lot of network fees are on streaming services? And how does net retrans evolve going forward?

Well, we will be, once we close on the TEGNA acquisition, the largest affiliate partner for every one of the networks. And in 3 of those networks, we will be distributing their programming in as large a piece of the country as they do with their owned and operated stations. That's a whole different place than a lot of other folks in the broadcasting business will be.

And so we think the negotiations perhaps could take on a different flavor for Nexstar than for other folks that are affiliate partners. But I open every one of those discussions by saying, we have historically paid you for programming and geographic exclusivity of that programming to monetize with advertisers and in distribution. And to the extent that your program is less and less or in a couple of cases, non-exclusive to us, it's worth less to us.

And so -- and again, I think when you are the largest affiliate partner to that network organization, you probably have leverage that other folks don't have. So we'll see how those conversations continue to progress. But we believe that the reverse payments, which have flattened out, will begin a downward trajectory.

Got it. And the NFL has been another hot topic in recent weeks. We had Lachlan Murdoch here earlier this week. So the press is reporting that the NFL is seeking to renegotiate its current media rights package, which was just done a few years ago. Curious how you see that playing out and how it could impact Nexstar going forward?

Well, it remains to be seen. The networks have a change of control provision, which Goodell was on record saying that they don't plan to trigger that in relation to Sky CBS. So their next opportunity with their contracts as currently constructed comes in 2029. So it's -- it would be curious to me as to how that negotiation would be reopened unless it were voluntary on the parts of the rights holders, the networks, which could happen.

But I look at -- the NFL is an important part of our sports revenue and our sports programming, but when you look at the totality of sports programming, it's obviously not all of it, and sports as a percent of our ad support is important, but it's certainly not all of it. And so I think that the NFL, while interesting, certainly and in where we have NFL home team cities is an important component of sports advertising.

The NFL is not as important to local affiliates that make the vast majority of their revenue from local news as it is to networks that might be a singular source of revenue programming and building their flywheel. So listen, we love having the NFL on our stations. And I think that will continue long into the future.

I think Roger Goodell was on record saying, as long as he's in the chair that the NFL will always be on broadcast. So we'll see. I think the games that were recaptured out of the ESPN package will likely go into a Sunday morning package, which is hard for affiliates that are in local news or religious programming or whatever to clear. So that maybe goes to a streamer.

So there'll be more around the edges, but I think the base product, I don't see that going anywhere anytime soon, and it will just be a question of rights. Peter Chernin said years ago, he said the NFL, you've 1 of 2 outcomes. One is you win in which case you take all the revenue you generate and put it in a dump truck and drive it down Park Avenue and we drop it off at the NFL headquarters or you lose it and you don't want to be that man or that woman who lost the NFL.

So I tend to think that having all 4 networks involved and always a streaming presence and a credible alternative viable threat will put a floor into pricing for the NFL, but -- and they are masters at being able to monetize around the edges, but again, I think it's -- I tend to think that the current status will maintain itself for at least the horizon I'm looking at, which is the next 5 to 10 years.

The broadcast reach is essential.

Absolutely.

Okay. So I want to turn to advertising. So ex political, you were able to grow advertising a healthy 4.5% in the most recent quarter. What drove that performance and what's kind of your state of the ad market as we sit here today?

Yes. So I think in the fourth quarter, we had the benefit in this year of not having to crowd out from last year that we had for political. So that was a good portion of it. But we still had a better fourth quarter than what we were anticipating at the beginning of the quarter.

And we view that -- that really happened sort of across the board with respect to our businesses, both our national, local or digital businesses, all overachieved in terms of what we thought they were going to achieve at the time when we put the fourth quarter guidance out.

And really, that was just buys later in the quarter than we normally see, some big name advertisers came back into the mix that we weren't expecting. And so we view that all as a positive signal in terms of the health of the overall advertising industry improving. And in the first quarter, our guidance is that our nonpolitical advertising revenue should be flat -- flattish is our expectation for the first quarter.

Okay. And let's talk about political. We're a little over 2 months into the election year. What are your expectations for 2026 versus the last midterm cycle? And what positions Nexstar to capture more of that overall political dollar spend?

Yes. Our guidance for political advertising is that we will garner a low double-digit percentage share of the advertising dollars that are spent on television. You can see -- there's a company out there called AdImpact that does some really good work around make estimates for political advertising. And so they do expect that broadcast will be fairly consistent with the last cycle in terms of the dollars that they're going to generate.

Every year, we do really a very, very detailed bottoms-up analysis by district, where the elections are going to be, where they're going to be contested, how does that overlay with our footprint, and we sort of come up with an estimate of what we expect our share is going to be. And this year, it's a little bit lower than what we had in prior years, and that just goes to the composition of where we see the races kind of matching up.

It's not anything that's sort of a big difference. We were in low teens before. Now we're low double digits. It's in a similar range. But we feel like there's obviously no slowdown in spending and fundraising, and we're feeling good about this year.

We just saw in Texas that the Republican Senate primary is going to a runoff. We didn't have that baked into our numbers. And John Cornyn is on saying he spent $70 million to get to last night. Now there's a sprint to May, and then there'll be a sprint to the general in the fall. So there's always puts and takes to our political forecast. But I would say at this point, we are pleasantly surprised.

Excellent. So I wanted to talk, are you interested in moving into streaming with your existing assets? Obviously, like FAST channels are very popular. How are you thinking about if you were to kind of pivot more to streaming and what that would look like?

Well, listen, I think that -- I don't know that it's as much as it is an addition. I don't see it as an either or, right? I mean, my view is we have a content factory that produces all of our local content, and that is roughly 330,000 hours of content that goes to something approaching 450,000 hours once we acquire TEGNA.

And so I view that as our job with that content factory is to produce as many different pieces of content for as many different audiences as at many different times of the day using as many different distribution mechanisms as possible to distribute that content. So it's free over the air. It's in a linear newscast, it's on our website, it's in a station app. It's probably in a FAST channel.

And so -- and I tell our people that, listen, if we were in the furniture business, and we only made one couch, that wouldn't be much of a business, so we can't just take the same content and populate it everywhere. So our job is to continue to evolve our mindset and continue to evolve what we do and not be concerned with how we do it. I mean distribution is just a means to reach the consumer where they are.

But in Tampa, for example, I was there a few weeks ago, our 11:00 a.m. newscast, you think of folks that are available to watch TV at that time of the day, and they're generally retired, right, or home or whatever. Our 11:00 newscast looks a lot like a podcast now. And there was trepidation, well, geez, if the viewers just finish watch the prices right, are they ready for this, right? Well, lo and behold, the ratings came out, and that time period, that newscast is up 43%.

So it shows that the audience is interested and willing to look at different formats and different distribution of content. And so -- but there was a real trepidation to take that leap and said, well, we haven't done it at 6:00, and I said, well, why not? We got to think about those things. So there's a whole -- and TEGNA has actually done some very interesting work around this as well.

There's a whole conversation to be had about how we produce different newscasts at different times of the day and how we can use technology, how we can use AI to make sure that there is no unconscious bias in our stories, and we're developing those kinds of tools. So it's an exciting thing because that's the IP that we own, that's the space that we have chosen to be in and want to ultimately dominate, but it's a real opportunity.

And we're also trying to create a creator economy inside of Nexstar that will allow people to maybe produce podcasts or shows for FAST channels and perhaps down the road, if we monetize them, we can share that. I said -- to our folks, I said that model seems to work pretty well for TikTok. So maybe we can introduce something like that to our 15,000, 16,000, 17,000 employees. And if some of them take us up on the offer that might be interesting to see how that all plays out.

So it's just trying to get people to think more broadly and differently, but streaming is -- it's not broadcast versus streaming. I think it's broadcast and streaming and connected TV and this and other things that we can do but it starts with our content, which -- that IP is very precious, very valuable to us. And we just have to be very smart about how we produce it and distribute it and be imaginative about it.

That's fascinating. So I want to turn to the CW, which saw almost a 20% increase in viewership last year. As you noted in your earnings call, you expected to reach profitability by 4Q. Maybe just how much of this do you attribute to the sports rights, you've acquired NASCAR, and what else is going on beneath the surface there?

Well, first of all, it's been a dramatic pivot, right, from what the network was, it was 15 hours a week of basically scripted entertainment. Now it's -- there's 800 hours a year of sports programming on the CW. And if I look at our initial broadcast of NASCAR this year, the Daytona race, not the 500, but the Saturday race, we peaked at almost 2.4 million viewers, that's people exposed to the CW.

Our programmer there, the man who oversees that, Sean Compton, put an episode of one of our game shows coming out of a NASCAR race, and now that game show in prime time is generating significant increases in viewership. It's Scrabble hosted by Craig Ferguson, who used to host the late show on CBS. And so that flywheel is starting to work there.

But I look at the shows that are really working for us. We have police shows, we have game shows, we have scripted entertainment. And then obviously, we have WWE on Tuesday nights and then our entire sports portfolio. And at the same time, our costs were down by over 30% year-over-year in terms of that's the amount we were able to reduce our expenses, and we will be profitable in the fourth quarter of this year and then on a going forward basis.

Our teams are getting much better at selling sports. We've got a lot of new advertisers as well as new sponsors into our sports programming. We took almost costless -- low-risk chance on professional bowling and put it on the air. And it did 0.5 million viewers on a Sunday afternoon. That used to be a good night in prime for the CW, which it is no more.

So it's just -- it's adding things on and we'll add some more Savannah Banana games this year and just around the edges, and it's entertainment, right? And so we're just trying to speak to the broadest possible audience that advertisers follow eyeballs and the more eyeballs we generate, the better we do.

You hit on it with bowling and Savannah Banana, which is obviously trending very positive here right now. But do you see other opportunities to selectively expand your sports rights portfolio?

I think that, yes, I mean, obviously, we have a chart like every sports organization does when major rights are due to expire. There's not a lot that we expect will come before the end of the decade. But I think there's an opportunity as we have done in the past, to partner with rights holders and maybe offload some of their inventory that they either don't have space for or can't monetize appropriately.

So we did that with NBC and NASCAR 2 years ago when they had Olympic overflow from the Summer Olympics. So I think we'll continue with those conversations but we're still playing moneyball, right? We're still growing this network into, a, profitability and then, b, into something more substantial. So we're not going to get out over our skis.

Great. I want to turn to NewsNation. It posted strongest year ever in 2025. It was the fastest-growing cable net in the 25 to 54 demo. What do you see progressing for the network through 2026 and where are the biggest opportunities there?

We had a fantastic February. We're up dramatically. And again, the 25-54 in total viewer demo over last February. And so the streak continues. I think it's just -- we're live 18 hours a day now and pretty much all cable networks repeat overnight. But we have live programming, live news and then adding -- expanding our talk shows in prime time all the way to midnight now.

And I think people are just -- what we're seeing is when there's breaking news, a lot of times, our numbers will spike because, particularly on the weekends, people know we're live when some of the more mature cable news networks in an effort to cut costs have gone to tape the programming on the weekend. So we're there immediately and instantly.

And we've got a correspondent in Tel Aviv and reporting live from there. And we were on the air 5:00 in the morning on Saturday. And so we're competing with and we keep track every time we beat one of the legacy cable news networks. We make sure everybody in the organization knows about it.

And so we've got some real momentum. Obviously, we're growing off of a very low base, but we're able to show growth in a marketplace where not many others can make that same claim. So we just need to continue to do what we're doing. And if we can show incremental growth on a sustained basis, that's all I can ask of them.

Makes sense. I want to turn to capital allocation. You've obviously returned a lot of capital to shareholders through buybacks and dividends over the years. Clearly, delevering post TEGNA is going to be the near-term focus. But how should we think about capital allocation over the next 12 months? And once you've kind of reached your target leverage.

Yes. Right now, we're conserving cash for the transaction, right? That will go -- that's the most accretive thing that we're working on, which is the acquisition of TEGNA. And so we announced we're going to continue to pay our dividend. We're just -- we didn't increase it. So we're using all that cash to go towards the acquisition.

We're going to lever up a little bit in connection with this transaction, around 4x is the estimate for at the time we close, and then we'll use our free cash flow to delever, and then we'll have to see from a share repurchase perspective, if we get back down to kind of where we were, we can do that unless there's other better uses for our cash.

We've always said M&A is number one with the bullet in terms of what we've been able to achieve in terms of the accretion relative to other things that we can do. And we always look at that. We look at what -- if we just buy back our shares or if we make acquisitions, what is more accretive. And really M&A has been the opportunity for us. We just haven't been able to do it given the regulatory environment for some time.

Great. I want to see if we have any questions in the audience here. Okay. I got more. So I guess maybe for investors who are a little less familiar with your company, how would you outline the key investment thesis for Nexstar? Obviously, you have some tailwinds working for you and some self-help with M&A on the come, but how would you frame the investment opportunity for maybe those who haven't looked at the company in a while?

So I think when people think about media, I put it into 3 buckets that there's -- you probably are going to have your favorite streaming company, whatever that would be. You may have your favorite networks company, whatever that may be. And what we have been driving toward is that if you choose to play in the local end of the media ecosystem, there's only one company that you think about, and that's us because we are the biggest, we'll continue to get bigger.

And when you look at the amount of free cash flow we generate, we rival some of those companies in the network space. And of course, hardly anybody in streaming makes any money. So I tend to read the financial statements from the bottom up, which I think is an important note for investors. And if you read it the same way, you mentioned it earlier, pro forma, we'll have $3 billion of EBITDA, that's a pretty decent company.

I think that if the subtrends continue in cable as we've seen them, and Charter buying Cox, if Cox post similar results, then I think everybody else can say, okay, that model looks like it works and maybe we got to emulate that in our company that's not called Charter or others. And so I think you could see that turn fairly quickly. And I think if that happens, the space potentially gets rerated, right, and that could lead to multiple expansion.

And we're going to keep doing what we do, which is acquire, integrate, put the synergies out, deliver the numbers, and lather, rinse, repeat, that's been the story since 2010, right? And so the company turns 30 years old this year. And again, we've just been doing what we've been doing. And so I think we've got a pretty well put together playbook here to continue to perform.

I just signed a new 3-year agreement with -- to continue at the helm here and continue to be the third largest shareholder of the company. You can't say that about a lot of those other media companies necessarily, and I'm not throwing shade on them. I'm just saying if you want to know why we're unique and why I think we're worthy of consideration, you got a Founder CEO that started on his own, didn't inherit anything, and has been shown up in the office for 30 years here to build this thing into something substantial.

And we have aspirations to continue to build the company. And so we -- this won't be our last transaction, and we -- I got to tell you that we are very -- we would not be considering these kinds of transactions were it not for this administration in place, both with the regulatory agencies and then obviously, in the White House because they have been conducive to M&A and thinking about investing in local markets and communities and things like that. So we're very appreciative of the support of the administration as well.

And we've got another 2.5, 3 years to run there. So I think that we'll take as much advantage as we can. I think it's interesting to note that while we're levering up to 4x, I mean that is by far the lowest leverage post acquisition, if you exactly look at Tribune and Media General. And if we close on my expected timetable, the balance of the year with the political advertising bump that will come, I think you'll see us on delevering pretty quickly. And if you're starting at 4, it's a lot easier to get to 3 than it is if you start at 5.5.

So I think that we will continue to have a very solid balance sheet that will be an asset of the company, our local content assets and our business development team, which is our local and national sales force, those are the assets we have. And then how can we overlay all of those assets into as many growth opportunities for the company, again, using that local base that has been our core from -- for 30 years.

Excellent. And I want to close out, you've been outspoken about the benefits of sunsetting ASTC 1.0 (sic) [ ATSC 1.0 ] and moving 3.0. Can you maybe just hit on the benefits and the implications for Nexstar there?

Sure. We are members of a consortia that is looking at spectrum monetization, spectrum development, and we have cash paying customers now. They're not going to -- they're not spending life-changing money with us at this point in time. But I think that will happen over time. And so it's high-speed data transmission, it's precision location devices and things like that.

There's 1,001 uses, if you will. We are a lower cost replacement for expensive 5G networks that are out there. We could provide a backup GPS system to the United States, which is a public benefit. We're the largest industrialized country in the world that doesn't have a backup GPS. And so there's a lot that can be done with spectrum monetization.

Again, Chairman Carr at the FCC is open to innovation and development. And so those are the kinds of things that we plan to work on the day after we close on the transaction, not that we're not working on them now, but they will come increasingly into focus because, again, we'll have more spectrum available for commercialization by advent of the TEGNA acquisition.

Excellent. Perfect place to end. Perry and Lee Ann, thank you so much for joining us.

Thank you.

Thanks for having us. Appreciate it.

Good day, and welcome to the Nexstar Media Group's Fourth Quarter 2025 Conference Call. Today's call is being recorded. I will now turn the conference over to Joe Jaffoni, Investor Relations. Please go ahead, sir.

Thank you, Rochelle, and good morning, everyone. Let me read the safe harbor language, and then we'll get right into the call.

All statements and comments made by management during this conference call other than statements of historical fact, may be deemed forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Nexstar cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those reflected by the forward-looking statements made during today's call. For additional details on these risks and uncertainties, please see Nexstar's annual report on Form 10-K for the year ended December 31, 2024, as filed with the U.S. Securities and Exchange Commission and Nexstar's subsequent public filings with the SEC.

Nexstar undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

It's now my pleasure to turn the conference over to your host, Nexstar Founder, Chairman and Chief Executive Officer, Perry Sook. Perry, please go ahead.

Thank you, Joseph, and good morning, everyone. Thank you for joining us today. Mike Biard, our Chief Operating Officer; and Lee Ann Gliha, our Chief Financial Officer, are with me on the call, as always.

Nexstar's fourth quarter financial results capped a year marked by strong execution and bold strategic action to shape our 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, all set the stage for a very exciting year of growth ahead for Nexstar as reflected in our stand-alone Nexstar pre-TEGNA full year adjusted EBITDA guidance of $1.95 billion to $2.05 billion.

The rationale for the Nexstar-TEGNA combination is becoming increasingly clear. Consolidation is accelerating across the broader media industry from the Hulu-Fubo transaction to the proposed Charter-Cox 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'm 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 explanation for close is by the end of second quarter 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 16 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 NBAs return to broadcast fueled a 16% 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 15 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'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 is 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're 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's distribution outlook. While we are focused on closing our proposed acquisition of TEGNA, we remain equally disciplined in executing against Nexstar's core business.

Beyond maximizing the political advertising opportunities presented by the midterm elections, our top 2 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 nonpolitical advertising trajectory. At the same time, we are further streamlining and centralizing our operations, automating select production functions, 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 projects about $10.8 billion in total political advertising for the '25, '26 election cycle, a record amount for the midterms, with broadcasting expected to capture nearly 50% of that total or about $5.28 billion. 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've used to create the clean balance sheet that we have today to return capital to shareholders and pursue highly accretive M&A like TEGNA and have executed with our proven playbook and grounded in our steadfast community 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.

So now with all that said, let me turn the call over to Mike Biard. Michael?

Thanks, Perry, and good morning, everyone.

Nexstar delivered fourth quarter net revenue of $1.29 billion, 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 nonpolitical advertising revenues. Fourth quarter distribution revenue of $720 million increased $6 million 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 2/3 of its subscribers. Looking ahead, we have approximately 30% of subscribers up for renewal this year.

In 2026, on a stand-alone Nexstar-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 million decreased $209 million or 27.6% over the comparable prior year, primarily reflecting $233 million year-over-year decrease in political advertising to $21 million. However, nonpolitical 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, nonpolitical 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've 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 million in political advertising revenue during the quarter, primarily driven by Virginia's statewide general election and spending on -- general election spending and 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 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 nonpolitical 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 4 years, up 10% year-over-year, averaging over 1 million 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 with the O'Reilly Auto Parts Series season opener at Daytona delivering 2.3 million peak viewers, including more viewers in the 18 to 49 demo for any addition of this race since 2018. The momentum continued last week in Atlanta, where we've delivered 1.4 million average viewers, representing the best performance for this race since 2016.

With 100 additional hours of sports program expected in 2026, nearly 47% of The CW schedule will be sports or sports adjacent. At the same time, we're 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 4 primetime telecasts 273 times across total viewers and key demos in the 2024-2025 season. That's up from just 45x a year ago.

Similarly, NewsNation continues to hit consistent ratings milestones. In 2025, NewsNation remained the #1 fastest-growing cable news network in the 25 to 54 demo. For the year, NewsNation surpassed MS NOW 60x and CNN 40x in head-to-head telecasts across total viewers and in the 25 to 54 and 35 to 64 demos. This compares to the 2024 period when NewsNation surpassed MSNBC 4x and CNN 2x in head-to-head telecasts.

So to close, I want to reiterate our confidence in our long-term outlook and the enduring strength of Nexstar'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 a 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.

And with that, it's my pleasure to turn the call over to Lee Ann for the remainder of the financial review. Lee Ann?

Thank you, Mike, and good morning, everyone. Mike gave you most of the details on the revenue side and on The CW. So I'll 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 million or 0.9%, driven primarily by reduced commissions from sale of political advertising revenue in Q4 of '24, reduced news and production expenses, reduced promotions from our operational restructuring initiatives and lower administrative and onetime expenses.

Q4 2025 total corporate expense was $65 million, including noncash compensation expense of $20 million compared to $48 million, including noncash compensation expense of $20 million in the fourth quarter of 2024. The increase of $17 million is primarily due to onetime costs associated with our proposed acquisition of TEGNA and the impact of a reduction in the bonus reserve in the fourth quarter of '24 that was larger than the fourth quarter of '25.

Q4 2025, amortization of broadcast rights included in our definition of adjusted EBITDA was $75 million, a reduction of $23 million from $98 million in the fourth quarter of '24, 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 million in the quarter or 67%, primarily related to TV Food Network 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 million, representing a 33.6% margin and a decrease of $195 million from the fourth quarter '24 of $628 million.

Moving to the components of free cash flow and adjusted free cash flow. Fourth quarter CapEx was $54 million, an increase of $19 million from $35 million 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 million, a reduction of $13 million from the fourth quarter of 2024. On a cash basis, this compares to $89 million in Q4 2025 versus $101 million 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 million compared to $67 million in 2024, a decrease of $34 million, primarily related to decreased pretax operating income in 2025 related to decreased nonelection political advertising. Payments for capitalized software obligations net of proceeds from disposal of assets and insurance recoveries were $6 million versus $4 million last year. In Q4, cash programming amortization costs were greater than cash payments by $19 million versus lower by $13 million in 2024 as certain programming payments were prepaid.

Pulling this all together, consolidated fourth quarter 2025 adjusted free cash flow was $214 million as compared to $411 million last year.

Now turning to our 2026 guidance. We believe Nexstar's stand-alone 2026 adjusted EBITDA will be in the range of $1.95 billion to $2.05 billion. Perry and Mike already provided some of the key assumptions that are embedded in that guidance, including: one, our expectation for gross and net distribution revenue growth 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 nonpolitical advertising in the back half of the year; three, total operating corporate expenses and amortization of broadcast rights, excluding onetime charges, will again decline year-over-year due to our continued plans to affect our business by focusing on efficiencies and reducing programming costs; and four, we expect The CW will continue to reduce its losses 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. Those factors 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 adjusted free cash flow. We are currently projecting CapEx of $125 million to $130 million for the year and $30 million to $35 million in the first quarter. Based on the current yield curve, we anticipate full year 2025 cash interest expense to be in the $355 million to $365 million area, an improvement of $11 million versus 2025 levels at the midpoint.

We project Nexstar'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 million. Q1 interest expense is expected in the $85 million range.

Full year 2026 cash taxes are expected to be approximately $315 million to $325 million range, an increase versus 2025 of $208 million due to an expected improved income, primarily a result of the election year. For cash taxes, we use a 26% tax rate when calculating our estimated tax before onetime and other adjustments. The first quarter includes only a very small amount of state income tax in the $2.6 million range. As a reminder, we will use the annualization method for tax, meaning tax related to the fourth quarter of '26 will be largely deferred to '27.

In 2026, payments for programming are expected to be in excess of amortization by $25 million to $30 million due primarily to an investment in programming for future years with approximately $1 million 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 million to shareholders comprised entirely of dividends as we are conserving cash for acquisition of TEGNA. For the year, we returned $351 million or 42% of our adjusted free cash flow to shareholders in the form of $226 million of dividends and $125 million of share repurchases, reducing our year-end shares outstanding by 1% to 30.3 million.

Nexstar's outstanding debt at December 31, 2025, was $6.3 billion, a reduction of $26 million for the quarter as we made quarterly amortization payments. Our cash balance at quarter end was $280 million, including $13 million 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 as of December 31, 2025, for the last 8 quarters annualized was 1.71x, which is well below our first lien and only covenant of 4.25x. Our total net leverage for Nexstar was 3.09x at quarter end.

Our 2026 cash flow will be deployed first to fulfill our mandatory obligations, including debt repayments of $111 million and $36 million of pension and defined benefit plan contributions, the anticipated 2026 dividend of approximately $228 million 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'll open up the call for questions. Operator, can you go to our first question.

[Operator Instructions] And we'll go on to our first question. We'll hear from Dan Kurnos with Benchmark StoneX.

Great. 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 really super helpful like kind of walk through the pieces. I guess, since you guys called out digital optimization and expense rationalization as your 2 priorities. Given all of the AI tools that are out there, what we're hearing from peers, what we're hearing from kind of the broader tech landscape, I mean how much of that is sort of embedded in the guide you've given this year? How much is applicable on, say, like content cost reduction for things like CW or NewsNation? Just any way you can help us frame up kind of the opportunity set you see there to continue sort of this expense reduction momentum would be helpful.

Dan, I'll 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, that anxiety would turn into enthusiasm. We certainly appreciate the support of the President vis-a-vis his tweet and follow-on comments by the Chairman of the FCC and his support for the deal. And as to timing, that's really the purview of the regulatory agencies. We are working 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. So we remain consistent in our belief that the transaction will close before the end of second quarter. We are hopeful that we can close sooner than that, but we'll obviously continue to engage with the regulatory agencies to try and get to the to the desired result, not only on the national ownership cap, but the approval of our transaction.

On your questions about digital and expense, maybe I'll take digital first. I think that Nexstar has got a tremendous local sales force. We have over 1,500 sales folks across the country. Relationships with over 50,000 advertisers. Our advertisers really value our television products, but they also value our apps and our websites and they are also increasingly looking for audience extension opportunities. And because we have those great local relationships, we're able to sell more and sell a broader audience, not just including our local television audience, but if somebody wants more entertainment or they want more different demographics, we can sell that and add that on to the portfolio.

So we've had good success with that, especially on our local side, and that really has been driving the growth. And 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, which 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 just look at the business in ways to optimize the operations. And are there ways that we could do things in a different way that's more centralized or to use new technologies to help create efficiencies in our local operations and even more centrally. And so we are just continuing to reimagine that. And that's one of the benefits we have because of the scale of our business. We just have a good opportunity to be able to do some of those things. And you saw it in our 2025 results, and you'll see it again in our 2026 results.

Our next question, we'll hear it from Benjamin Soff with Deutsche Bank.

Another one on the regulatory side. Now that you're a bit deeper into that process, have there been any surprises so far in your conversations with regulators? And 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'm curious what you're seeing as far as the macro environment so far in 2026 as it relates to advertising.

Sure. As it relates to the regulatory process, I mean, we continue to engage vigorously with the DOJ, and I think it 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 obviously defer to their judgment. But I think that the information that we provided has been strong and we're laser-focused on that. So we feel very good about where we are, the dialogue we've had, the progress we've made, the endorsements that we've received. But as to transaction particulars, we're just not there yet in terms of those expectations. But as we've reported historically, we expect that if there are any divestitures, they would be de minimis to the overall value of the deal.

Yes. And then just on the overall macro environment, I think we're feeling decent about it. I think one of the things that we'd like to track is within our overall advertising categories is what percentage of the categories are increasing versus decreasing in terms of the revenue growth. And we're seeing in the first quarter versus the fourth quarter, a greater percentage that are increasing than we saw in the fourth quarter. So I think we're -- we had some guidance here of flattish in terms of our nonpolitical advertising in the first quarter. So we're feeling decent about the macro outlook.

And next, we'll move to Aaron Watts with Deutsche Bank.

Just 2 questions. Lee Ann, maybe one for you to start. Just based on your performance to close out '25 and your view into '26, any change in your outlook for pro forma leverage once you close the TEGNA deal?

Not really, no.

Okay. Great. And then secondly for me on the advertising side, Perry, this question is a bit of an offshoot of one 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 marketplace with your ad inventory?

Sure. Well, 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's some real opportunity there to overlay that technology and that sales force with our inventory, which currently is not on the Premion platform. So that is an upside in operating the business. I wouldn't necessarily characterize it as a synergy, but obviously, we think that will prove as time goes on.

As to programmatic on linear, I mean, 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're in the early, early stages of trying to develop with other partners. We need to reduce the frictional cost of buying linear inventory. And I think technology is a way to do that. And I think that we'd 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're attempting to access.

And so that's my vision and where I would like us to get to. Obviously, When people ask me what we're going to do on day 2 of the TEGNA acquisition closing, it's to work on that project. And work has started already, and we've got pretty good task force together and I'm doing another update here in a couple of weeks. So we intend to try -- and obviously, as one of the largest purveyors of advertising in the world, I think that we were ranked by one analyst as the 18th largest purveyor 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. And at the end of the day, it's really should be one set of inventory, one process, seamless, as I said, from pitch to pay, and that's the gold standard that we're going to try and work to achieve.

And next, we'll move to Patrick Sholl with Barrington Research.

I guess maybe just a quick follow-up on advertising. Could 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're kind of seeing any greater enthusiasm from the Supreme Court ruling?

So with respect to just the categories, auto was our biggest decliner but not by like any sort of outstanding amount. But we did see the rate of decline being offset within that category by good growth on the digital side. And we're actually seeing a pretty nice improvement in that auto trend into the first quarter. So we're 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. And then anything kind of other than that, even on the downside, nothing really was distinguished. I think I mentioned earlier that we did see more categories increasing than decreasing overall, and we're seeing that trend continue into the first quarter and be even a little bit better in the first quarter. So things are looking okay, I would say. And but there's nothing really like to read into the various categories, no outliers that are driving the transaction or driving the outcome one way or the other.

With respect to the tariffs, I don't know that we've seen anything in particular there. I would remind you, I think one of the points that we always like to make is it's about 60% of our advertising revenue comes from services categories versus good service -- goods categories. So we do have a little bit of a natural hedge there because we are much more service-focused than goods-focused. But I wouldn't say that there's been anything that people have been talking about with respect to tariffs as of yet, but we'll keep you posted.

And next, we'll go on to Craig Huber with Huber Research Partners.

I've got a broad question here. The uses of AI in your operations, can you just give us some examples of things that are moving the needle that you're excited about that AI is helping you, whether it be on the cost savings front or enhancing your product to speed up things, et cetera? Just some examples there would be helpful first.

Sure, Craig, I'll take that. We've actually deployed some AI tools across the organization inside our local newsrooms really to help us just on the workflow front, make the process a little bit more efficient. It allows 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.

So I think looking forward, we're in the middle of deploying some AI for our sales team that we expect will help with prospecting, sales development and also with workflow and operations in that front as well. So we -- early days yet, but we're optimistic about some of the potential that's out there as that technology starts to flow down into our industry.

And then my -- sorry, do you want to go ahead? Go ahead.

No, no, go ahead. Sorry, Craig.

Sorry, I wanted to also ask, just maybe an update on alternative uses of spectrum. I don't think we've heard about that lately. Maybe just sort of update us on what's happened in the last year and what maybe the plans are this coming year. I know it's a long way out to be meaningful for your company and your peers, but just sort of update on alternative uses of the spectrum, please.

Sure. I think to underscore what you said it is a long way out before it's meaningful for us or our peers. So in the last year, as you know, we formed a joint venture with 3 of our fellow broadcasters EdgeBeam Wireless. That organization is really just at the early stages of formulating its management team and its go-to-market strategy. I think you'll see them in the coming year be in the market with products. They're out there right now talking with customers. I think, again, early days, but we're starting to see some early orders flow. Some of that is proof of concept. Some of it is actual revenue. But we're optimistic that, that business will take off and really demonstrate to the market the unique the unique broadcast or benefits of a broadcast spectrum for high-speed data transmission.

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

And I joined a little late, so 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 of the conclusion we're going to get. The DOJ is a little more of a black box, and I think the initial commentary is you expect minimal divestitures. I was just 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 kind of the future of how the DOJ looks at broadcast ownership within markets.

And then also just a question on synergies. TEGNA has some good digital advertising businesses. I'm guessing that scale helps in political cycles. I don't think any of those benefits are in your synergy guidance. Do you have any experience with these from deals like Tribune or even CW that you could share in terms of where there could be some opportunities for kind of 1 plus 1 equals more than 2 in some of those revenues over time?

Craig -- I'm sorry, Steven, on the regulatory front, as I said earlier, we have provided reams of information to DOJ and studies from economists that we've hired that talk about the definition of the marketplace and the need for a redefinition of video, which is where we compete. And obviously, we provided that information, but we, at this point, have not had any definitive feedback as to how they're interpreting that information.

As to the topic of divestitures, we have had no conversations about divestitures at all at this point in the process. Not to say that it won't come up later in the process. But again, we continue to maintain that if there were divestitures, it would be a minimal percentage and not meaningful to the deal. And so I think the agencies -- the DOJ is meant to be a black box, disclosures there are not required to be public. But I have read the information that we provided and the economic studies that I think are highly, highly credible and very, very convincing. But it is obviously up to the folks at the DOJ, and there's been some change in personnel there. And so other folks are getting up to speed, but it's up to the DOJ and to the FCC to render their opinion and ultimately to come to a decision.

But we feel very good about the work that's been done, the information that's been provided, the endorsements we've had and the stage at which we are in the process. So we're very confident that we will get to a finish line in the time frame that we outlined.

And then on the synergies, I would just say, Steve, on the digital side, as Perry mentioned earlier, TEGNA has this business, Premion, which is really focused on the CTV end market, which we know is growing very nicely. And so we're excited about the opportunity to bring our stations to bear in that market in a little bit of a bigger way. So we're feeling positive about that. But you're correct. We have not put any revenue synergies other than the retrans synergies that we've talked about previously into our synergy number.

And then with respect to political, I think we -- it all -- as you know, that all comes down to what market is it, where there's a contested election and where do the dollars need to go. And so to the -- one of the things that we thought was going to be beneficial about this transaction is it does give us more exposure to some of those political markets. We have a presence in Georgia, but we didn't have a presence in Atlanta. They've got some great stations in Maine that is a contested election market. They've got a station in Toledo, Ohio, which could also be a good political market for us. So -- and Phoenix, Arizona is the other one where they have a larger market or a larger station than we do there. So all of those things, we think, should accrue to the political picture going forward, and we're optimistic on getting this deal closed in advance of the cycle this year.

And next, we'll hear from Jason Bazinet with Citi.

Okay. At risk of sharing my own ignorance, I'm going to ask this question. I think you said on the call that you think that digital ads will exceed your national ad revenues. And I think the last time you disclosed digital ad revenues is around $400 million. And I sort of think of your national ad revenues as being at The CW network and would have said it's already bigger than your national ads. So what am I missing?

Yes. So I think all you're really missing there is that CW is national advertising, but it's really like a subsegment of that, right, network national advertising. We also have significant national advertising at our stations, which are national buyers that then look to place their ads in local markets. So those are -- that's the other piece that we refer to as national.

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

Thank you, operator. I appreciate everyone joining us today, and we're very pleased at 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 the last 22 years of quarterly earnings calls, and we look forward to updating you on our next earnings call in about 90 days' time. Thank you. Have a great day.

Thank you. This does conclude today's teleconference. You may now disconnect your lines.

I'm very pleased to announce our next speaker, Perry Sook, the Founder, Chairman and CEO of Nexstar; and Lee Ann Gliha, CFO. Thanks for being here.

Thanks for having us.

Maybe let's start with discussing the key highlights in Nexstar's 2025 and what your priorities are as we look out into 2026.

Well, I think in 2026, our first priority is closing a pending acquisition. And we're doing a lot of that spade work in D.C. and in diligence right now. It's occupying a lot of our time. We have a pretty well-worn playbook to get that done. And so we're just working through the steps in the process. I think the other thing that we're doing is, as we have assembled all of these assets, we have stood up a team for selling these assets and selling cross-platform. And so we're just beginning to plumb the depths of what's possible there, network deals with regional station group add-ons and things like that, starting to generate some meaningful revenue for us, and we're starting to see a little uplift in our ad support as a result of that. Obviously, we have a lot of -- pardon me, distribution deals up between now and the end of the year with the traditional MVPD universe. And so we are knee deep in negotiations on all of those as well. So there's a lot going on and -- but I think the way we've deployed the team, we have the bandwidth to execute at a high level on all the tasks in front of us.

Okay. So let's dive into the TEGNA merger. Can you provide us an update on the regulatory process and your thoughts on President Trump's recent comments regarding the merger?

Sure. Well, process related. I think the encouraging thing from my standpoint is that the FCC put our transaction on public notice literally a little more than a week after they received it after the government reopened after the shutdown. So I think that's encouraging to me that we're in the public comment phase which runs through the end of the month, and then there'll be reply comments through the end of January. And at that point, the FCC will have gathered all of the information they need to process the transaction. So I think that's good news. I think their expedient manner in which they put the transaction on public notice now kind of means the DOJ and the FCC are on a similar time line in terms of working through their processes. As you know, the DOJ did not close during the government shutdown. And so we got and began to comply with the second request letter immediately. And so that will be done in the first quarter as well.

So I'll be spending 4 of the next 9 days in Washington, D.C. meeting with regulators, meeting with folks on the Hill to continue to extol the virtues of the transaction and work through the process of getting it done. As it relates to the tweets that the President has made, listen, I think he is very attuned to what's going on in the media space. First and foremost, we wouldn't be contemplating this transaction if he weren't in the White House. So it's President Trump and his policies towards deregulation and Chairman Carr's desire to deregulate and free the local media industry from these artificial and antiquated constraints, created a window of opportunity that we're now attempting to push on that open door.

So I certainly believe that the President is entitled to any opinion he might have. But I don't think this will be the only tweaks you'll ever see on this transaction, the potential Netflix transaction or any other derivative that might come from that, he's going to weigh in because he is very attuned to the media, and he is going to make sure that his opinion is known not only in Washington by the counterparties involved in the transaction. And I certainly respect that.

Right. Yes, it's odd that you're the second presentation in a row where I've asked what do you think of the President's tweets, but yes, here we are.

Well, I told our team, I said, listen, we're in the public comment period this month and next month. And so a lot of people will have things to say about the transaction. And so we will be whipsawed. But -- and people may choose to try and trade on that. I certainly respect everybody's business model. But I said we need to not pay attention to noise. We need to keep our heads down and do the work and when the transaction is actionable when it's gone through all the regulatory processes, that's the time to have other considerations. But until that point, there's not too much I think to get excited about right now.

In the FCC, I mean, I've followed Chairman Carr and previously Commissioner Carr on Twitter and just his writings and he strikes me as very deregulation focused, as you said and clearing out the clutter and a lot of these sort of legacy rules that sort of serve no purpose in a modern sort of media world. It would seem that -- I mean, it just again, following him for years, it would seem like the FCC is not going to be much of a problem for you. I mean what -- do you think that the FCC is influenced by what comes down in the White House?

Well, I think that the Chairman Carr is going to want to know that there is political support for what he's going to be doing as well. And I think there's also a sense of urgency to move through this process before the midterm elections, while all 3 houses of government are kind of aligned philosophically towards deregulation and towards removing antiquated and outdated regulations and allowing businesses to grow and prosper and I've been on record saying I think we'll have more tailwinds than headwinds economically in 2026.

So -- but I agree with you, the Chairman Carr, going back to his time as a Commissioner said that these rules don't make any sense. In fact, we've got a lot of rules on the books that don't make any sense. And he's already taken steps to delete rules, some rules around telegraph and other things that make no sense to exist. This is another step in that process. And my job is to make sure that we've complied with the regulatory process, but also I've been spending time on the hill to make sure that the political support, we had 24 or 26 senators send a letter to Chairman Carr, and it was somewhat bipartisan calling for deregulation of the industry and elimination of the ownership cap. And so I just want to make sure that we continue to remind people as to why this transaction is in the public interest and that he then will have political support to do what he knows from a regulatory perspective is the right thing to do.

Right. And where do you stand with the DOJ. The DOJ is a little bit more sort of black box to me. In the past, we've had some okay contact there, but you said that they're on about the same time line. Just what's your sort of -- or what's the read you're getting from the DOJ in the processs?

Well, we have meetings calendared that with the DOJ, not only staff but front office personnel to talk through the transaction and our rationale for it, and they'll have the opportunity to ask questions. And obviously, all of that will go on during the pendency of our fulfilling the second request letter, which will probably be done mid-first quarter, we'll have all of the information that they've requested to them. And I -- listen, I think it's an interactive process, and -- and I think they do rely very specifically to -- rely on very specifically to data-driven arguments. We have a little -- they're probably more -- we have more economists on retainer right now that are probably at this conference, and we are working through the economic arguments as well as the definitional arguments and trying to provide as much data as we can to allow them to make the best decision that they can.

Got it. I know a lot of times, you don't like sort of -- or people don't like sort of prejudging the deal, but what divestitures are you expecting to make to close the deal?

Too early to tell. Nobody has brought up divestitures, but we're also pretty early in the process.. We've said that based on our analysis of the deal, if there are any divestitures, they're going to be relatively immaterial to the overall transaction size, value and industrial logic.

Maybe let's talk about some of the financial benefits for the deal. You've spoken about $300 million in EBITDA synergies. Maybe if you can give us some more detail on sort of where those savings come from, over what time they're realized and sort of any other sort of financial benefits?

Yes. I'll take that. So $300 million of synergies is about 45% coming from net retrans, 55% coming from operating expense synergies. We anticipate that the substantial majority of those synergies are going to be realized within the first 12 months of the transaction. The -- on the expense side of things, it's really coming down to a few different buckets. Obviously, corporate overhead being 1 of them. You don't need 2 CFOs. You don't need 2 presidents. We also then have a number of back-office services and hubs that we utilize to service multiple stations. Can we add additional stations into those hubs and leverage those a little bit better instead of having 2 separate hubs, yes, we can do that. There's also been really just general market efficiencies.

We look at how we operate our stations, how they operate their stations. There's a lot of opportunity there in terms of how efficiencies that we can deploy. And then obviously, the largest component of the operating expense synergies is the overlap markets. We have significant 35 of the 51 markets are overlapped, and that's where you really can operate 2 television stations off of 1 infrastructure. And so there'll be cost synergies that will occur with respect to that as well. We do have some onetime costs that will be incurred in order to execute those. We included that in the purchase price when we announced it. And I would say we also have some probably more medium-term synergies that we haven't really baked in or quantified yet, and that really just comes down to facility consolidation. We have 2 buildings in a market, generally, they own their station. We own our station. So can we move these groups together and then execute on the sale of 1 of the properties, eliminate all of the property taxes and the utilities costs and so on and so forth. But that's going to take a little bit of a longer time frame to execute.

And what's the leverage of the combined company post the deal? And then what's the target and sort of what's the time line to get to it?

Yes. So prior to the acquisition, we were around 3.2x leverage, pro forma, we think will be in the 4-ish range. And then we're going to look to delever as quickly as we can, which we think we'll get back to around where we are sometime in '28.

Got it. And then obviously, we're not really through this one yet. But how do you see the sort of the market progressing from there? Would you be interested in additional M&A? Or do you think you're going to see further consolidation in the broadcast world?

I think both will happen. I mean, we would continue to have an interest in follow-on M&A. If you look at our company, you have to look at it through a local lens, right? We own and operate stations. We've chosen to play in the local end of the media ecosystem. We have a national cable network and we have a national broadcast network. Those were both outgrowth of the substantial station group that we have. And so anything that would be adjacent to local or additional local stations, but even other businesses in markets that could be sold and administered locally, I think, are all things that we would be interested in and our goal is to compete for the largest share of wallet in the marketplace, not just the TV dollars, but TV and digital is about 4.5, 5x what linear TV is by itself. And so let's focus on the piece of the iceberg that's below the water line that has the potential to create the most value. So we will continue to look at M&A, but it's got to be actionable, accretive and make more industrial logic than buying back our own stock.

Got it. Maybe we could pivot to the advertising market. We talked a little bit about the panel this morning, Fox, [indiscernible] is here. So like things are pretty strong. How would you guys characterize the health of the advertising market? And maybe what are your expectations as you look out into '26?

Yes. I mean we're seeing actually some good positive momentum in the advertising market. In the connection with our third quarter earnings, we had indicated that we thought that our fourth quarter nonpolitical advertising would be down very low-single digits. We now actually think it will be slightly up in the fourth quarter. So we're feeling good about that. We had some later buys in the quarter than we normally have seen. And so that's -- we view that as a positive signal. We haven't provided any guidance yet into '26. We'll do that in connection with our fourth quarter earnings results, but there's a number of things that are going to happen next year, which could be positive for us. Number one, being political. Number 2 being FIFA is going to be in the U.S. and in a good time zone for most of the matches. And then we have the Olympics in Milan as well. In addition, there's just more sports on broadcast in general. That's really not that quantifiable, but there's a number of special events that are happening this year that we think will be positive as Perry said, more tailwinds than headwinds going into '26.

And the midterms in particular, is how do you -- how would you sort of stack up the political situation and sort of the races and whether the races are competitive versus what we've seen in maybe previous midterms. I mean do you think we're going to continue on this track of growing political spend as we compare to the last midterms?

Yes. I mean if you look at sort of the last 3 cycles of just both presidential and midterm, Nexstar has generated about $0.5 billion of revenue from political advertising. And really, it sort of -- it depends on the cycle, there could be a lot of initiative, money on the ballot or you have additional presidential expense that just sort of varies. The beauty of the Nexstar portfolio is that we are so broad. And we typically, if you look at it, we're in 80% to 90% of the contested election market. So when you kind of look over time, we have a pretty stable ability to look at what market share we will have of political or political advertising spending, and that tends to be a low teens share. And really, what the benefit is there is 1 market gets hot, that's great. If 1 market goes cold, the money can go from the cold market to the hot market usually we're in a position to capture it.

As far as '26 goes, we have again, we'll put out our formal guidance in connection with our year-end earnings results. But ad impact of some good research. They've said they think that the -- I think the '25, '26 cycle, they expect to be up about 20% versus the '23, '24 cycle, most of that incremental going to CTV, but they do expect broadcast advertising to be about flattish from cycle to cycle. So we anticipate that we'll get our fair share of the dollars.

Got it. So some streaming companies have suggested that global advertising will become a major part of CTV advertising and TV. Do you agree with that? And how can you capture local advertising if it -- how will you capture local advertising if it shifts to streaming?

Yes. We're already capturing CTV on the local side. That is a portion of what we call digital because what we do is we will sell audience extension products to our local advertisers. And I think where we really feel like we have a benefit is that we have those feet on the street. We have 1,600 local sales force members that have relationships with 40,000 SMBs, and we're able to be in that position to help those local advertisers not only benefit from the wonderful proposition that linear television has for them, but also to be able to help access CTV for them.

Any interest in moving into streaming with your existing assets? Or is there anything you could do to sort of address that market? And then what would the strategy like [indiscernible]?

I think on the CTV side or on the streaming side of things, I think we are already kind of doing that. We have -- the CW has its own app, which is an AVOD app. And then we are also in the process of rolling out CTV apps for each of our local television stations. So we really feel like what Nexstar does the best is we provide programming, and we provide that programming across any platform that's available. So if you want to get your programming from cable, we'll be there. If you want to get your programming over IP, we will be there as well. And that's really just the job of our -- job 1 for us is to produce good programming that is going to be interesting for the audience no matter where they are.

And obviously, with streaming, it's a process of building scale, right? And so we are engaged in partnership discussions that could allow us to have access to more scale and higher ability to monetize and so we'll obviously keep you posted on those discussions as they continue to evolve.

Great. Perry, in your sort of opening comments, you talked about some of the distribution deals that are being renewed with the MVPDs in '26. Can you give us a sort of a lay of the land in terms of what you expect from the negotiations in '26 and should investors expect an acceleration in retrans revenue?

Well, historically, we've been able to achieve when we renegotiated an agreement, a decent step-up in rates in the first year from the deal that was done 3 years vintage. And so we expect that this round of renewals will exhibit the same. Historically, we've been able to outrun the rate of attrition by those rate increases and deliver positive growth in net retrans growth. And we think that, again, we'll see a continuation of that trend. We do begin to bump up against the law of large numbers in terms of the same percentage on a much higher base is harder to achieve because the dollars have to come from somewhere. But we do expect that we will continue to show growth in both gross and net retrans in '26.

You've previously suggested that there is 1 more cycle of retrans price increases before leveling off. Does that idea still hold? Or does the TEGNA merger give you enough leverage to support retrans growth for a longer period of time?

Yes, I think it still holds. I mean, we are still underpaid versus the eyeballs we deliver to the bundle and the revenue we get from that bundle. And so until we get to parity, I'm going to believe that we are underpaid. And I think if what I believe will happen over time is that some of these long-tail cable networks get pushed out of the basic bundle onto interest tiers, cooking tier, crime tier, romance tier, whatever they are. We already have kind of sports tiers, right? So that makes more money available to be a portion to the channels that people actually watch, which the broadcast -- the local broadcast stations in aggregate dwarf all of the cable universe in aggregate. And we believe that continues to be true, particularly with the continued migration of live sports to the broadcast medium.

And I think that we have been an object less than that with the CW and with our local stations where we've been able to do deals with sports teams and move them from cable to broadcast and in every one, we have delivered a larger audience than their historic numbers have been, whether that's NASCAR, whether that's the Texas Rangers in Dallas. It's pretty much the same story. It's just a question of how many of those deals you can access and how many of them you can do profitably because, again, reading the financial statements from the bottom up, we're very interested in making sure that we make money.

Right. So do you think the process of Versant being cleaved off of NBC and maybe to a lesser extent because there's no broadcast involved, but what it looks like the Discovery Global Network sort of being -- losing an NBA and then being carved off of Warner Brothers, does that accelerate that process where you're getting -- sort of more of the resources of the bundle can accrue to the broadcasters, which are obviously much more sort of sports specific. I just think that these assets are going to have sort of less bargaining power with the distributors. And that -- and my view sort of gives you guys sort of somewhat more bargaining power. Is that -- so that process you laid out, is that...

Yes, that's the way we look at the world. Yes, we think that plays out. It plays out over time. We also think, as we've been saying for half a dozen years that we think the rate of attrition will decline until it becomes virtually nonexistent, which there is 1 analyst that is reporting that growth in video subs this quarter and there's 1 MVPD that has said the same thing. Now we haven't seen it in the numbers they report to us yet. But if that's the direction we're headed, we think that has the potential to underwrite the value proposition of the entire industry because it's no longer the existential doom that will this revenue stream goes to 0, your paid TV subscribers go to 0. And we've been saying, no, it will eventually level out and moderate. And we think that, that's happening versus the bear case. And I think people would think about the inherent values of the companies, if there's a kind of a floor or a foundation under that particular revenue stream.

Great. Are you seeing better reverse retrans terms now that a lot of network feeds are on streaming services? And how does net retrans evolve going forward?

First of all, yes. And second of all, our conversations with our network partners are that we pay you for 2 things as a network partner. We pay you for the content, and we pay you for exclusivity. To the extent your content is less and less or in a couple of cases, non-exclusive to us. it inherently has less value. And when you look at pro forma for the transaction, the acquisition of TEGNA, we will be the largest affiliate group of every 1 of the 4 basic networks. We're already the largest affiliate group for CW and that will only grow. And so I think our seat at the table is entirely different than others' seat at the table, and I think we'll be able to press for certain things in our affiliation renewals that may be smaller companies with only a handful of network affiliates who have any particular ilk are going to be able to achieve.

So I don't think it will be one-size-fits-all solution, but I do think that we will benefit increasingly from our scale and our bargaining position vis-a-vis the traditional networks.

Makes sense. Where does the CW stand in terms of profitability? And when do you expect to reach breakeven?

Well, we're getting there, right? We started with a very, very negative business. And we've been every quarter after quarter, year-over-year have been improving it. Our expectation is this year, we're going to improve profit by I think, around 25% versus last year. And then next year, we will achieve profitability at some point during the year is our current plan. So we've done that by really more than having the programming costs while at the same time, increasing the amount of hours of programming by 40% and transforming the composition of the hours of programming to be about more than 40% from sports. So we feel very proud of what we've done so far on the network side. And I think that profitability discussion only tells you part of the story.

The other piece is what's happening on our stations aside of the equation because the network is just the network, but we have a number of CW affiliates, and that was 1 of the primary reasons for the acquisition to begin with. But by the fact that we have owned the network, we were able to bring back a number of those affiliates onto Nexstar stations, and that's been very profitable for us. And so when you look at the sort of totality of everything, it's been a good deal for us.

Great. [indiscernible]. NASCAR has obviously done well year-to-date. Does this give you confidence in acquiring additional sports rights to add to NASCAR?

Yes, it does. I mean, there's got to be something that's actionable. And we moved as fast as we did with NASCAR and with ACC and with Pac-12 and wwe because we looked at the kind of cascade of rights renewals and other than NBA, which we didn't think we would be cost competitive on and we weren't, and MLB, which we weren't really sure what the opportunity would be there, and it obviously is a short-term opportunity. But basically, the rest of the sports rights really don't mature until 2030 or later, NFL could opt out in '29 and renegotiate, so we locked up what we did, and we're glad we did when we did because I'm not sure we could make those same deals on those same terms today given increased competition.

We feel good about the portfolio. There's 1 more announcement to come before the end of the year, which will add some incremental sports inventory. And I tell people all time, we're playing moneyball, right? We -- we're not going to outbid too many people for too many things, but what we have targeted is sports that are on streaming or on cable that have suffered a decline because of their distribution. And we've been able to move to broadcast in with everything, ACC, NASCAR, WWE, we've been able to show audience increases over where they were a year ago and where they were in the case of NASCAR, the best numbers in 5 years. And so it's demonstrable.

I think that's why NBC went after the NBA. I think that's why ABC put more and more of their NFL packages on the ABC network as opposed to ESPN. And so we think it's been validated. We think we validated, other networks validated as well. We think it's a movement, and I think everybody understands it. And so where we have the opportunity to compete, we will, but we're not going to bet the farm on something that we hope works out, it's going to have to -- we will continue to have financial discipline around our sports acquisition as well as we have every other acquisition.

What's driving the improvement in NASCAR? Is it just better, more contested races or why -- any sense for why things have improved there?

I think it's pretty simple. I mean, -- you know that if you want to watch the Xfinity race that it's going to be on the same channel, the same network every weekend, and you don't have to worry about, okay, is this on Fox? Or is this on cable? Or is this on streaming? Or is this on NBC with the Cup series. And I'm not criticizing those decisions because they made deals that we couldn't compete with monetarily there. But I think the fact that people want simplicity in their entertainment, I think. And the fact that Jim France, who runs NASCAR says -- he lives in Orlando [indiscernible] "I know my race is going to be on Channel 18 in Orlando every Saturday. I know where to find it, I don't have to fuss with it, right?" So that's his words not mine, but I think that rings true for a large part of America and the viewing public and certainly the NASCAR audience.

Yes. And my dad, thanks you as a massive NASCAR fan. I'm sure he appreciates it. You've been outspoken about the benefits of sunsetting STC 1 and moving to 3.0. Can you walk through the benefits and the financial implications for Nexstar?

Well, sure. I mean, if we can move quicker to ATSC 3.0. It's just a more efficient use of the spectrum. It's an IP-based transmission which allows 4K video and HDR high-definition audio reception. And so that makes a better consumer experience, but it's also more efficient use of the spectrum. So when I think about non-video use of the remainder of the spectrum, a, there's more of it to play with to sublease. And I think it's a tremendous opportunity. Things get valued on a per pop basis in the digital world. They get valued on a per sub basis in distribution revenue. And so to me, the 2 are not wholly disconnected there. And I think that when I look at high-speed data transmission, GPS-based services, video to the connected car that's entertainment or navigation or whatever, those are all the kind of wonky things.

We're into distributed power and precision agriculture with driverless tractors and things like that. The sooner we can sunset the simulcast requirement, which is 1.0, it frees up more spectrum to experiment with. We developed this spectrum consortia called EdgeBeam with Sinclair, Gray and Scripps and TEGNA is not a part of that. But when we acquired TEGNA, their spectrum will become a part of that. So we will have, by far, more actionable spectrum and 3.0 spectrum than any other operator in the company, so -- in the country. And so we look at that as our mineral rights and our opportunity to develop another revenue stream, not dependent on a network, not dependent on anything other than our distribution, a backup GPS system for the country, which we don't have. We're the only industrialist country in the world that doesn't have a backup GPS.

We could deliver a treasure alternative to a satellite-based alternative, which is superior to having a backup being just another satellite in the sky. So -- and there's a national interest in doing that. So we think it works on a lot of levels and that we will -- ultimately, it's a voluntary process today. I think we will put a stake in the ground as to when we will plan to transfer -- eliminate 1.0 and transfer to 3.0 only. And I think you will hear -- you will see that date established before the end of the decade. As the data establish, we'll establish it before then. But I think that we will pick a transition date before the end of the decade, and we may even try to do a transaction -- a transition in a market or 2 earlier, just so we and the industry can learn what the transition looks like almost as a laboratory.

There's -- and so we have a whole work group that is focused on that. But the point is, I've said historically that I think non-video uses of our spectrum could generate as much revenue 5 years from now, 8 years from now, that distribution revenue does today, and that's about $14 billion for the industry. And for us, it's 25% of that. So we think it's a -- even if I'm wrong by 50%, and it's $1 billion of incremental revenue if that falls at a 90% EBITDA margin because you're just -- it's just lease activity, that's a substantial increase in equity value and per share value, I think, in the company.

So it's work worth doing. It's hard. It's not impossible. And that's -- I had a speech with kind of the TEGNA senior management team and I said, our focus is on closing the transaction. But here are the things I want to work on the day after and spectrum monetization and the push toward that is certainly at the very high end of the to-do list.

Right. And does the monetization really not start until the end of the decade once you've cleared -- once you've cleared the spectrum and converted from 1.0 to 3.0. And then is there any sort of -- are there any sort of CapEx or sort of spending ramifications to sort of harness the benefits of that?

No, that's the beauty. We're already build out these towers, these 3.0 lighthouses that need to be converted to individual sticks, but they already exist. And so the CapEx is fairly minimal to build out fully. Now we'll transition to the end-to-end consumer experience over time as we replace cameras and production equipment and things, just like we did from analog to digital. And so I think that will happen on a different track than the B2B opportunity that we see -- but no, I think that we will see revenue -- the consortia should have its first paying customer in first quarter. That will not be life-changing revenue, but it will certainly be beyond the proof of concept.

Right now, we're in proof of concept with auto manufacturers, with other folks that are interested in fleet management, that's interested in an enhanced GPS. And so we're doing a lot of proof of concept. We did with 1 auto manufacturer. We drove up and down the hills of San Diego, and it was kind of can you hear me now? Did the signal state on the monitor in the backseat head rest for the entire time. And it did. And so we're moving from the test phase to a proof-of-concept phase and we'll begin to -- you'll see some money start to flow in 2026. And I think it will be hockey stick, right? And if that position happens, '29, '30, then that's when I think you'll see a real acceleration. But I think you'll see real revenue increasingly over the next couple of years, begin to -- begin to show up.

Great. And maybe just wrapping up back where we started at the TEGNA deal, what are the sort of next milestones we should expect maybe over the next few weeks or months that sort of hopefully will make you feel -- guys feel better about the transaction maybe from the DOJ or from the FCC? Or what are the next things to look out for?

Well, I mean, we have to go through this public comment period in December and January. Obviously, the January will be reply comments. So if somebody files something and there are material misstatements of facts, we'll have the chance to address that in our reply comments and others can file reply comments as well. So I think that once we get to the end of that bleeding cycle, there won't -- the FCC won't be requiring any additional information to process the transaction. We have meetings scheduled at the DOJ with not only the career staff but the front office staff. And those will be very interactive, right? They'll be asking questions. We'll be asking questions.

We'll see from those questions, what they're most interested in, and that will inform our response going forward. And so we're not going to make any of that public obviously. But we're just in a process now. And so there won't really be unless the Chairman decides to drop a rule-making on something as part of the quadrennial review or the national ownership cap, which is a discussion, which is now a closed proceeding, he has what he needs. There's no more public comment there. So I would see that when Lee Ann starts to go to the market for financing, we feel pretty good about getting to the finish line. So that would be one that might be of interest to everybody.

Okay. We'll look out for that. All right. Perry, Lee Ann, I really appreciate you guys being here.

Great. Thank you. Thanks for having us.

Thank you.

Okay. Thank you. I'm Steve Cahall, media analyst at Wells Fargo. And for our next fireside, I'm fortunate enough to be joined by Perry Sook and Lee Ann Gliha from Nexstar, and there's a lot going on in the sector. So we'll dive right in.

Perry, Nexstar has never been shy about making bold moves in M&A. You did Media General, you did Tribune, CW. And I think TEGNA probably by enterprise value is the biggest move you've made and maybe even the boldest because the FCC is in the process of potentially making changes. I think you said that you're meeting them at the regulatory moment, something that Chairman, Carr, has kind of talked about all year long. So where are we, in your view, in terms of that process that you're meeting? And what can we expect to happen next as we track the merger towards the deregulation?

Sure. Well, today, obviously, the TEGNA shareholders had their special meeting and approved the transaction with a 98% affirmative vote. So we can check that box off. That's a positive step in the process. We will be completing the filing of our FCC applications any moment now. And that will then allow the FCC to begin their process now that the government has reopened. The DOJ was open during the pendency of the government shutdown.

So we continue to submit documents, got our second request for submitting the documents on that side. So all the processes that need the work are in the process of working and now it just takes time to go through the regulatory machinery and we will be responsive to their questions and information requests and continue to move toward the finish line.

And the FCC, I think, we've been able to track, especially with Chairman Carr's public appearances, going back almost a year now. The DOJ, to me has always been an agency that we have a lot less insight into in terms of how they think about things and particularly how they look at station overlaps. So knowing the FCC duopoly rule has been vacated. What do you think has changed at the DOJ or could be changing in terms of how they may look at antitrust since I think you've said that you expect divestitures to be pretty minimal for the transaction.

Well, they've been -- the conversations that our team has had with their team have been constructive. The kinds of questions they've asked, they've been open to information and new information, which I think indicates a willingness and interest in looking at all of this with an open mind, which is very positive. And when I met with the DOJ earlier this year, which was before we had come to terms and announced TEGNA transaction, just talking about the regulatory environment.

When we talked about the rules, I said, you either need to define television differently or your definition of market needs to change. When you look at all the competitive forces, particularly a big tech that now is -- Amazon is marshaling local advertising sales forces in local markets, in addition to taking sports rights, content, talent, and they can reach every screen in America, whether it's in your pocket or in your car or in your living room. And we're kept small to 39%, yet we have these public interest obligations.

We provide local news, and we think it's in the national interest that you support this industry and allow it to survive and prosper. And my 2 remarks I always make are, no one wants their news delivered by a chatbot, which if we don't make any changes, that's where we will ultimately end up. And big tech doesn't lead a coat drive in Dayton, which we announced yesterday and lead flood relief or SNAP benefit relief in West Virginia. And our local news people live in their local communities, they are pillars of the local community. And I think that, that service that we provide of content and B2C communication is essential.

And I think the Republic would have a best interest in retaining a free and independent press. And so there's no one that I have met that can defend the current rules with a straight face. And they all realize the rules need to change. And what we're trying to do now is give them the motivation to act on them rather than just hypothetically discuss them. And I think we'll meet that moment. And I think the government and the agencies, and I don't want to prejudge anybody's outcome. But the Trump administration and Brendan Carr, the FCC, have indicated their interest and willingness in deregulating.

They want to be pro-business, pro-economic growth and realize that local press is always accounted for as the most trustworthy of all the sources for news and information. So that's what we provide. And we think that the intersection of all of those things coming together is the moment that we're trying to take full advantage of in terms of bringing this transaction to the fore.

I mean it's interesting that while, I think, the FCC process gets the most attention, a change to the DOJ could have just as big of an impact on the industry and the ability to consolidate. So because we can kind of see what the Chairman's viewpoint is, what do you think will be the first proof point of we kind of see where the DOJ is in this regulatory moment?

Yes. I don't know that there really is one because the DOJ is a -- I mean, the process there is private, where the FCC, the filings are public, public can comment on them. We can reply to those comments. There's no process like that at the DOJ. So I think that the next point is when we certify that we have complied with all of the information requests contained in the second request letter, and then that will start again their 30-day clock under HSR to determine whether they want to further contest or will let the transaction stand to be approved.

So TEGNA will undoubtedly require a lot of integration work. I think it's something you've built some muscle memory in over the years with the acquisitions. I think you've also indicated that this isn't probably the last transaction that you intend to pursue. So how do we just think about post this transaction, sort of pro forma for what the company will look like? What do you start to prioritize from there? Is it national networks to complement the CW, news like NewsNation, larger DMAs? Just anything that would be at the top of your agenda.

Yes. Look, I think we are -- I always say we can desire what we want to desire, but you always have to have a willing seller if you are going to complete a transaction. So part of what the calculus is what's available for us to look at over time. I think historically, what we've said is, yes, having additional reach for the CW is a priority, being in larger markets is good for us because there's more synergy and opportunity and revenue benefit from that perspective. So from a transaction perspective of the -- station varietal, those are the types of things I think we would look for.

And we've chosen to specialize in the local end of the pool. And so our news network has been an outgrowth of our foundation of local journalism. Our acquisition of the CW was what was in the best interest of those stations and how can we make both the network and the stations more valuable. So we will continue to focus on local when other folks will focus on national streaming and things like that.

And then just lastly on the M&A topic. So you've talked to the $300 million in EBITDA synergies. They seem pretty conservative, at least based on some other transactions that some peers have looked at. But I think Tribune is probably the best analog of how I would kind of think about where these synergies come from. So maybe timing and sort of components, any additional detail you can add?

Yes. So of the $300 million, we have looked at Tribune. It's very -- it lines up very similarly. It's about 45% of those synergies coming from net retrans and 55% coming from operating expense synergies. On the operating expense side, it's really a combination of 3 or 4 different areas, 1 being just corporate overhead. You don't need 2 CFOs. You don't need 2 general counsels, you don't need 2 auditors. Those types of things can come right off the top. There's various hubs that we have that do our billing and do our traffic and do our master control and those things can be expanded to take on more -- it's more of the services that we provide to those stations without really doubling up those sizes. And then there's the in-market consolidation, we've got about 35 of the 51 markets are -- markets that we're already in. So that's about 70%.

So you think about -- that kind of correlates to the amount of the synergy that we have coming out. And that's really you don't need to have 2 general managers in a market, for example. You can really operate 2, as Perry likes to say, 2 newspapers off of 1 printing press, 2 television stations off of 1 infrastructure. And so that's really where the costs come from. We've got an extremely detailed playbook. We've literally gone through and benchmarked all of their stations and their efficiencies off of our stations and our efficiencies, and that's a whole other area of synergy that we've been able to identify. And so those are the things that we'll execute.

We do expect that the substantial majority of the synergies will be able to be affected within the first year. And that really is, I think, pretty consistent with how we've been able to do these in the past.

And I would think that there is then still a long tail of sort of asset value or efficiency gain that you capture. I think there's parts of the CW that you're still realizing benefits from. So if we think about $300 million of sort of year 1, 2 synergies, is there additional kind of upside that happens over time?

I love this question. Well, yes, for sure. I mean one of the things that we have said that we did not factor into that number is facility consolidation. For the most part, we own our station locations. They own their station buildings. Do we need to have 2 buildings in a market? Probably not. But that, as you probably know, takes a little bit of time. You've got to retrofit one building. You've got to put the other building up for sale. You got to move everybody over. There's some costs associated with that and then there's obviously some tax on the sale of the property. But there should be value that kind of comes out of that, probably more in the medium term.

And then there's just the operating expense benefit you get from that as well. So you don't have to pay utilities. You don't have to pay property taxes. You don't have to pay the lawn mowing costs and things like that, that will be accretive to the EBITDA line in addition to the value. And then I'm sure, Perry likes to say, we've done our desktop analysis, but when you get into the markets and you really are there, you can really likely find some additional savings that we can have, and there will be all sorts of things that we'll find, I think, efficiencies over time with our scale.

I do not have the lawn mowing efficiencies in my...

Oh, you got to put that in there. Sometimes those lawn mowing costs, I'm always like, I can mow the lawn for less than that, but I figure it's probably not a good use of my time.

A kind of more strategic question. This is something I've thought about a lot. I mean if someone who's followed local broadcast for quite a number of years, it's just -- I think often, media investors really look at the TV world of linear and streaming at the household level, that's not true. A lot of people are very much in both, in broadcast and streaming, linear and streaming, however, you want to say it. But there is definitely an increasing cohort of Americans that have decided to live in a sort of streaming-only world. And I've always thought it's interesting that broadcast, local news isn't as well represented there as it could be. I know every station has a website, has a presence, it's certainly something I visit where I live in Austin, with, I think, [ KXAN ] is a station. But as we have these aggregators and streaming, I'm thinking things like Netflix, YouTube, maybe Roku, they're looking for content all the time. And soon, you're going to reach 80% of the country with local news specific to every market.

So I'm just wondering how you think about your scale sort of matching into the streaming world and being able to deliver local news sort of locally at scale maybe through some of these platforms over time.

I think there's 3 pieces to that question that need to be responded to. First of all, don't assume we haven't had some of those conversations. We're not going to give things away. That's not a free, it's not a good business model, at least it hasn't been. However, we are free over the air. So why did people go to streaming. They're trying to reach consumers that are outside of a paywall environment. We started that way, right? We're free over the air.

So I think we're already -- everybody is trying to replicate what we have, which is ubiquitous reach and we do that. And by the way, that is free. And so to do the same thing twice and spend billions of dollars on it never made a lot of sense to me. Having said that, I think that we also drive a substantial amount of revenue from the pay TV universe today. And I think the last thing we want to do is to take on an adversary or relationship with a distribution partner just for the sake of saying, oh, well, we're in the streaming business now and so those conversations have to be worked through as well.

So I think you've got that, the fact that we're already available to all consumers free over the air with an antenna and maybe someday to your phone with a dongle or to a laptop with the same device. But I think that from our perspective, we're providing a lot of that service. And I think the more that people look at the cumulative cost of all of their streaming options, the more that service that we offer might be more and more attractive.

On retrans, so I think the end of this year, early next, a little more than 50% comes up for renewal. I think when we've talked in the past before, Perry, I think you've said that there's maybe one still sort of solid cycle ahead for pricing to increase at the station level before it levels off. And I know as the dollars get bigger, the percentage increase probably slows. But just -- as you kind of think about sort of the outlook from here, there's a pricing component, there's a subscriber churn component. So maybe how are you feeling about the combination of factors in the next year or two?

Yes. Look, we haven't really provided a '26 guidance yet, and we will do that in '26. But I think as Perry said, we do feel like there's still opportunity to grow. You've seen in our investor deck that we continue to be under-monetized relative to the viewership that we bring to these distributors. And so feel like we are on the right side of that equation in terms of the negotiations.

Sure. A record football season doesn't hurt. .

Exactly.

It's also encouraging, Steve, that Comcast and Charter are talking about the best quarter they've had in 5 years in terms of subscriber losses, meaning best that they have lost the least. And we do see that trend continue to moderate. And so I think that is helpful. Having said that, we said in a year where we don't have a lot of subscribers up for renewal, which was 2025 -- in 2025. We said flattish gross retrans dollars and net retrans dollars, which would indicate our escalators are keeping pace with the rate of attrition. And obviously, if you go back to '24 or the first year of the new cycle, which would have been '22, we had substantial growth in the face of pretty substantial erosion. And again, the gross was outpacing the loss of subscribers.

And maybe just as a follow-up on cable. One thing I've been curious about is I cover the cable companies as well. We've certainly seen this big improvement started with Charter. You've seen it follow with Comcast given the work that they put into their video package. It's a little tougher for us to track what happens, especially on the vMVPD side of things. I'm not sure what subscriber information, like how real time it is. But do you all get the sense that the improvement in cable is a net improvement to the ecosystem rather than like a trade from one to the other just because that would be pretty material to the churn rate.

I wouldn't say we can comment on that quite yet. But I do think that the concept that the vMVPDs are going to the moon and the MVPDs are going to the floor is just not happening, right? You're seeing some impact to those VMVPDs and a lot of impact that's not showing that continued growth, just skyrocketing.

And then on the reverse compensation side. So I think now pretty much all of the network content in some way, shape or form is available in streaming, whether that's Fox One or ESPN with some of the ABC content, et cetera. And some of the peers, we've started to see some lower costs in reverse comp, which I think is reflected a little bit of this change in tone, re-recognition of the industry. So how are you thinking about kind of the opportunity ahead on the net side?

Well, we open every conversation with the networks when we're in negotiation is, I pay you for content and exclusivity. The extent your content is no longer exclusive, it is worth materially less to us. And I think we've got proof points on our own P&L that would show that costs are abating. Now when we close on TEGNA and we go to the networks and we say we're the #1 distribution, #1 affiliate group in terms of distributing your signal in the U.S., I think that those conversations can take an even more interesting turn because we obviously contribute a lot of value and it's a symbiotic relationship. I'll acknowledge that. But I think that we may be able to break some new ground there just in terms of retaining more of that value for ourselves.

And pro forma for TEGNA, have you considered any of the sort of scale benefits in the $300 million in synergy? Or just due to timing, et cetera, is that incremental to the benefit?

Yes, that's not included in the $300 million.

Yes. Okay.

That's just called doing your job. .

Right. Exactly.

On the advertising side, so I think there was a little bit of maybe misunderstanding just coming out of the fourth quarter about the differences in the local and national advertising market and what those trends are. So maybe it would be helpful, Lee Ann, you and I have talked about this, if you could just unpack the quarter a bit, both Q3 and Q4.

Yes, sure. I mean in the third quarter, our nonpolitical advertising was flat, which was better than what we had anticipated it was going to be. And then in the fourth quarter, we guided the nonpolitical advertising revenue to be down in the very low single digits. And really, the -- if you sort of look at the third quarter versus the fourth quarter and you adjust for the impact of crowd out, the rate of decline in our local business is the same in the third quarter as it is in the fourth quarter.

What's really impacting the fourth quarter is sort of like a bunch of little stuff that's on the national side of the business that is causing that discrepancy. So for example, in the third quarter, the CW had a great quarter because we had NASCAR for the whole quarter. In the fourth quarter, the CW had NASCAR in the fourth quarter of last year, so it was lapping that. We have -- also with respect to the CW, we've been, as you know, by design, have been evolving the composition of the programming. So we've been moving away from the scripted dramas that play really well on the -- our AVOD app and moving more towards other types of content that don't play as well on the app.

And so our digital revenue on the app is impacted, but that's by design. And then we had a couple of other oddball things like we have a national digital business that we had some political revenue that was in there in the prior quarter that we didn't pull out because we hadn't historically pulled out digital and political. And there was a low-margin account that they lost that was -- they were selling or buying a social media for that they lost.

So these are a few things that have impacted the fourth quarter guide, but it wasn't really meant to be any sort of testimony on the health of the market, we think the market is pretty stable. I had a question earlier about auto. Somebody asked, and we have seen auto, it's still down, but it's not as down as it was, and it's not really any -- not differentiated from any of the other categories that are in that -- in the down category.

And if we think about pretty stable, my sense is kind of things were pretty unstable around the tariff announcements in the second quarter, they sort of improved since. But sort of zoom back to where we started the year. Would you say the ad market on the whole has been sort of better, worse or about as expected in 2025?

I think about as expected.

I agree with that. Yes. .

And then for the CW, Lee Anne, you started to talk a little bit about the programming strategy. If we look at this asset and we look out a few years' time, is there a target that sort of either percentage of content value that's live versus sports or percentage of hours that's live in sports, just how you envision this looking like?

Well, I think today, if you just take a snapshot today with the deals we've announced, roughly 40% of the hours, the network programs are what would be considered sports programming. I think that can grow incrementally here, maybe closer to 50%. There are a couple of deals in the Q4 Sports that we haven't announced yet. And -- but I don't think it probably grows much more materially than that, just looking at the rights. And what's available for even discussion between now and the end of the decade.

And so I think that we're making other fine-tuning. We have a couple of game shows on the air, where we're bringing Craig Ferguson in to host one of those, and he used to be on CBS late night. He's a well-traveled comedian, a lot more name recognition as a host. And so we have Dick Wolf crime procedural on Order Toronto on our air now, which is performing very well. And when we bought the CW, it was the 20th ranked network of broadcast and cable networks, it's now eighth. And I think sometimes in the puts and takes of profitability model, people lose track of that. And we're programming it for less money than what we inherited, and we've increased the amount of hours by almost 45%. And -- so everything is evolving there as expected. And what we haven't highlighted as much as how good it's been for the affiliates to have.

Can you imagine an affiliate in Carolina that didn't like having North Carolina in Wake Forest last weekend, ACC Football or we had basketball with SMU that played very well in Dallas, and we have the Pac-12 or the newly constituted Pac-12 that plays very well on our stations on the West Coast. And so we don't cut any of those incremental gains in revenue or distribution revenue in our CW profitability analysis is kind of in its own silo, but it has been a benefit to the company to have an improved CW on our owned and operated stations, which was one of the motivating factors for buying our controlling interest to begin with.

And I think for a number of years, we've focused on breakeven, but I'm sure you all are thinking well beyond just breakeven for the network. So how do you think about where the margins can get to on the CW over time?

Yes. We haven't really provided that longer-term guidance.

I'm still thinking about breakeven by that way.

Right, exactly. We need to get -- we need to one step in front of the other, one foot step in front of the other before we get there. But I think the other thing you have to think about is most broadcast networks and companies, public companies that are out there, really talk about their broadcast networks together with their O&O station portfolio. And so we are getting close to 50% of the market in terms of the total subscribers in the U.S. that are -- sorry, total television households in the U.S. that will be Nexstar-owned CW affiliates.

And so when you look at those affiliates together with the network and the value that we've been able to create from owning that network and bringing back some of those affiliations onto our station portfolio, it's been a good transaction for us.

And then just on the exciting issue of ATSC 3.0 and sunsetting of 1.0. I'll be honest, like from my seat and I think many of my peers, we understand the opportunity. We know it's a real asset. It has capital behind it. Finding that sort of revenue solutions that turned it into a valuable asset is, I think, what we're all waiting for. So I'd love to hear where you think we are in EdgeBeam's development, the Spectrum's development and when we could start to see some of that more meaningful revenue that crystallizes value.

Well, there's an EdgeBeam Board meeting going on in Boston, literally this week, either today or tomorrow, I believe. And listen, EdgeBeam has got $40 million of capital behind it to build basically a business development organization. We've hired a very good CEO for that company. And their whole job is to go out and find customers to drive on our spectrum toll road, if you will, and we're roughly ambivalent as to what the use is, we would have to approve the use before they'd have access to our spectrum. But it's -- I think that you'll see our first commercial customer signed either right before the end of the year or right after the end of the year. It won't be enough -- it won't be life-changing money, let's put it that way, but it will be the first. And we've had a lot of conversations.

We've done drive tests with an automotive manufacturer in San Diego, which as you know, is pretty hilly terrain. It's basically, can you hear me now? Did the signal hold the whole time we were going through the hills and dales of San Diego, which it did, by the way. And so there's a lot going on that leads to test cases, that lead to proof of concept, that lead to real business. And so I continue to believe it's a [ zero ] call option on our equity maybe appropriately priced today, but I think it's mineral rights that we have yet to monetize. And I think, again, you'll see significant revenue begin to flow probably in 3 to 5 years forward. But I think you'll see our first commercial clients signed, like I said, either right before or right after the turn of the calendar year.

And do you think that's the opening of the gates?

Well, I think it will open the door just to crack and nothing breeds success like success. And so -- but the applications are -- it can be GPS-based auto correction, which can apply to autos in an urban environment. It can apply to precision agriculture, can apply to fleet management or drone package delivery management. We have this backup GPS system that both the DOT and the DoD and the Trump administration. And the first administration of President Trump said it's in the national interest to have a backup GPS system, which we can provide terrestrial, which is superior to have -- just having a primary and a backup satellite in the air that could both be taken out at the same -- with the same dirty bombs.

So we're working on that. We think that will help to spur migration and interest in development of the transition to 3.0. The fact that the FCC said this should be a voluntary transition. They're not at this point issuing any mandate would allow us to sunset 1.0 sooner than later and that would give us more spectrum to use for non-video uses. And so 5G replacement, it's datacasting, all of those kinds of things are going to be opportunities for us with the non-video use of our spectrum. And we're very excited about it. I said this is -- has the potential to be as much revenue to the industry and our company as retrans revenue is today, and that's probably plus 10 years kind of a comment. But -- and BIA, others have said it might be in that same ZIP code. So we've got to go develop it. The transition from 1.0 to 3.0 is difficult but not impossible because it can't really be a national flash cut. But it's work worth doing if that kind of revenue and result in EBITDA and free cash flow comes as a result.

So it's really I'm focused a lot on it. And so I think that we will have when we anti-in the TEGNA spectrum into EdgeBeam, but also into the available spectrum for the consortia, we'll have a near nationwide footprint, which that's when things start to really get exciting and hopefully start to happen.

Just the last question. I mean everything we talked about here kind of is about scale. You're the largest scale player, you're going to be an even larger scale player, Advertising in the CW continues to be kind of more virtuous, the ability of spectrum and the benefit of TEGNA within it. So when you take the long view of the sector, how many scaled players do you think that we'll see in broadcast maybe by the end of this administration or something like that time line? Is that a good thing?

Yes, it is a good thing. You need big companies in a strong, healthy industry. We would welcome healthy competition. It's easy to compete against a weaker or wounded player, but that doesn't help you to be your best, right? You want to play a good team and not necessarily a team that's got a bunch of players out that weak. So from our perspective, consolidation is good because we need to develop a foundation under local journalism that preserves that asset for not only our local communities, but for the country as a free and independent press.

And I think healthy companies can invest in innovation, can spend money, companies that can barely service the debt, don't have that luxury. So I root for a healthy ecosystem. We think that we will be without peer. We will be the unicorn in the local TV space. No one will be as big. No one will have as robust a balance sheet as we do. And we can then look to use those assets to continue to grow via acquisition beyond the TEGNA if those opportunities present themselves.

And I don't think you can get there with everything else that's left necessarily. And you're going to have willing buyers and willing sellers and all of that, but we'll look to continue to grow. And we want people to think, okay, I've got my network horse that I'm betting on. I got my streaming horse that I'm betting on and my local horse that I'm betting on is Nexstar. And we see that's -- how much of that happens before the end of this administration, but then before the end of the decade, I think a lot of that becomes more in focus.

Great. Well, thank you all.

Thank you, Steve. Thanks for having us.

Good day, and welcome to the Nexstar Media Group's Third Quarter 2025 Conference Call. Today's call is being recorded. I will now turn the conference over to Joe Jaffoni, Investor Relations. Please go ahead, sir.

Thank you, Kerri, and good morning, everyone. Let me read the safe harbor language, and then we'll get right into the call.

All statements and comments made by management during this conference call other than statements of historical fact, may be deemed forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Nexstar cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those reflected by the forward-looking statements made during this call. For additional details on these risks and uncertainties, please see Nexstar's annual report on Form 10-K for the year ended December 31, 2024, as filed with the U.S. Securities and Exchange Commission and next to our subsequent public filings with the SEC.

Nexstar undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. With that, it's my pleasure to turn the conference over to your host, Nexstar Founder, Chairman and CEO, Perry Sook. Perry, please go ahead.

Thank you, Joseph, and good morning, everyone. Thank you for joining us on our call. Mike Biard, our Chief Operating Officer; and Lee Ann Gliha, our Chief Financial Officer, both with me this morning.

During the third quarter, we made the milestone announcement of our definitive agreement to acquire TEGNA and a cash transaction valued at $6.2 billion. The proposed acquisition will strengthen Nexstar's position as the nation's leading local media company with high-quality broadcast stations, award-winning news operations and innovative local programming, all of which collectively demonstrate our commitment to trusted community-focused journalism. Operationally, TEGNA will enhance and expand Nexstar's scale, geographic reach and community impact by adding 64 top-performing stations primarily in the top 75 DMAs and to our growing portfolio of valve media assets. Financially, on a combined pro forma basis, Nexstar and TEGNA generated over $8 billion in revenue and $2.56 billion of adjusted EBITDA.

Taking into account expected after-tax synergies and incremental interest expense, the transaction is projected to be more than 40% accretive to Nexstar's stand-alone adjusted free cash flow and with roughly $300 million in anticipated synergies, we expect only a modest increase in pro forma net leverage. We're making good progress on our path to closing. TEGNA filed its definitive proxy statement and the shareholder vote there will take place on November 18. We submitted our HSR filing on September 30, and as expected, we received a second request letter from the DOJ on October 30 as well as a handful of inquiries from state AG offices.

Our FCC applications are ready to go once the federal government reopens, and our expectations for closing the transaction by the second half of 2026 remain unchanged. In the meantime, as previously announced, we are taking a disciplined approach to capital allocation, conserving cash that would otherwise have been used for share repurchases in order to fund the more accretive TEGNA acquisition. As we enter this next phase of Nexstar's growth, I've never been more confident in our strategy nor more energized about the opportunities ahead. This is a defining moment for our company, our industry, our shareholders and the communities we serve. When I said on our August conference call that I'm deeply committed to seeing this transaction through, I meant that. That's why I was pleased to extend my employment agreement as Chairman and Chief Executive Officer through March 31 of '29.

Together with our teams, we will continue our mission to build a stronger, more competitive local media company and expand Nexstar's impressive long-term record of success and shareholder value creation. Turning now to our third quarter financial results. Nexstar delivered another solid quarter of net revenue and adjusted EBITDA, reflecting stable distribution and nonpolitical advertising revenue as well as strong expense management. It's clear that broadcast television remains the bellwether and the most profitable segment of the media ecosystem, delivering the most watched content and most valuable programming. According to Nielsen, time spent watching broadcast TV increased 20% from August to September, representing the largest month-to-month gain since 2021 and more time spent watching television on broadcast than the entire universe of cable networks. September's results were driven by a strong start to the NFL season as well as college football.

Through week 6, the NFL averaged 18 million viewers per game, the highest average viewership since a record 2015 season. And similarly, the average total audience for the first 2 games of the NBA season newly launched on Broadcast Network NBC reflected a 36% improvement versus the first 2 games on TNT last year and double the total audience of the games on ESPN and 3.6x the average total audience of the games on Prime Video first week of the season last year. And of course, November started with a bang with Game 7 of the World Series delivering over 25 million viewers, the highest number for baseball in nearly a decade. These results underscore the enduring power and reach of broadcast and our consistent ability to aggregate mass audiences in real time, something other platforms just can't replicate. Major sports franchises continue to value the unmatched reach and advantage of broadcast television and sports programming continues to complement Nexstar's popular local news programming, which accounts for almost half of our total household viewership.

In terms of the CW, Nexstar's own broadcast network, CW Sports delivered record performance with the best quarter since the launch of live sports programming in Q1 of 2023, driven by continued strong viewership of the Nexstar Xfinity series as well as a strong start to the ACC and Pac 12 college football season. In fact, last Saturday night, our final Xfinity race of the season on broadcast and prime time beat college football on CBS in total viewers, adults 25-54 and adults 18 to 49. In addition, solid results from our entertainment programming lineup drove the CW sixth consecutive quarter of primetime ratings growth. Year-to-date, the CW has surpassed competitive Big 4 primetime telecast 250x across total viewers among the 18 to 49 and 25 to 54 demos. That's an impressive increase over the 45x we accomplished that for the full year of 2024. The continued success of our long-term strategic growth on high-impact news and sports programming further validated by the performance of NewsNation, which ranked as the #1 basic cable network for year-over-year growth in the third quarter, continuing its trend from Q2.

On a year-to-date basis, NewsNation surpassed MSNBC 57 times and CNN 39x in head-to-head telecasts across total viewers and in the adult 25 to 54 demo. That compares to 2024 when NewsNation surpassed MSNBC 4x and CNN 2x in the head-to-head telecast. These results reflect the fact that NewsNation's programming and unique fact-based reporting is resonating with viewers who are looking for a refreshingly balanced and impartial reporting and analysis. In summary, the continued strength and consistency of Nexstar's financial performance reflects our stable diversified revenue and operating base, our disciplined expense management and continued execution across our portfolio. Our proposed acquisition of TEGNA meets the deregulatory moment where it is and sets the stage for an incredibly bright future ahead for Nexstar, our industry, our shareholders and the communities we serve. With all of that said, let me turn the call over to Mike Biard. Mike?

Thanks, Perry, and good morning, everyone. Nexstar delivered third quarter net revenue of $1.2 billion, a decline of 12.3% compared to the prior year, primarily reflecting the year-over-year reduction in political advertising. Third quarter distribution revenue of $709 million was flattish compared to the prior year quarter, down 1.4% and primarily reflects VMVPD subscriber attrition and the resolution of a nonrecurring disputed customer claim offset in part by increased rates and other contractual commitments, growth in VMVPD subscribers and the addition of CW affiliations on certain of our stations. Without the impact of the resolution of a legacy customer dispute, distribution revenue would have been slightly up.

Advertising revenue of $476 million decreased $146 million or 23.5% over the comparable prior year quarter, primarily reflecting a $145 million year-over-year decrease in political advertising. However, nonpolitical advertising was essentially flat and better than our expectation of a low single-digit decline. Growth in national advertising, including at the CW and NewsNation, strong growth in local digital advertising and the absence of political crowd out that impacted last year's third quarter, offset soft local advertising driven by the absence of the Olympics in the third quarter this year. No advertising category materially moved the needle in the quarter, and we have not observed any negative impact on the pharmaceutical category from recently introduced regulations.

As a reminder, the pharmaceutical category represents less than 3% of our total nonpolitical advertising. Speaking of political, we generated approximately $10 million in political advertising revenue during the quarter, primarily driven by spending related to state-wide elections in Virginia, including the Governor's race as well as California's redistricting ballot initiative. Looking ahead to the fourth quarter, nonpolitical advertising is currently forecast to decline in the very low single-digit area on a year-over-year basis, benefiting in part from the absence of political crowd out in the quarter. but offset by advertising revenue softness and tougher year-over-year programming comps at the CW and our national digital business. Political advertising is expected to be consistent with 20,214th quarter levels.

Turning to the CW. We are consistently delivering favorable results from our programming investments, especially from sports, which continues to account for more than 40% of the CW's programming hours. And we continue to build our CW Sports portfolio. During the third quarter, we expanded our relationship with the Pac-12 conference through the 2030 31 season to include 66 annual events, including 13 regular season football games, 35 regular season men's basketball games regular season women's basketball games and the semifinal and championship games of the new Pac-12 women's basketball tournament. During the quarter, we also completed a new multiyear agreement with the professional bull riders to be the exclusive live broadcast partner of the PBR teams series on Saturdays and Sundays, which began airing this last August.

The Nexstar Xfinity Series, transitioning to the Nexstar O'Reilly Auto Parts series next season is now firmly established exclusively on CW Sports, delivering strong momentum and benefiting from the scale and audience engagement of our broadcast model. Xfinity races delivered an 11% year-over-year increase in viewership for the first 30 races of the season with more than 1 million viewers for 20 of those raises. By comparison to last season, only 8 of the first 30 races broke the $1 million viewer mark in 2024. Audiences are consistently showing up for our live sports lineup. Ratings for ACC and PAC-12 college football games in the CW have more than doubled year-over-year among adults 25 to 54, while WWE NXT continues to climb since moving to the CW from USA network, up 12% year-to-date. That momentum is translating into progress toward our financial targets. In the third quarter, we reduced losses at the CW by $5 million or 24% year-over-year.

In the quarter, growth in distribution and advertising revenue virtually offset lower licensing revenue and lower operating expenses, net of a small increase in programming amortization drove the improvement in losses. Our outlook for the year for the CW remains unchanged as we continue to project 2025 losses to be lower than 2024 by about 25%. And our expectation of achieving breakeven sometime in 2026 also remains unchanged. To close, I want to reiterate our confidence in our long-term outlook and the enduring strength of Nexstar's business model. our programming strategy anchored by live news and sports continues to deliver results for the CW and News Nation, 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. With that, it's my pleasure to turn the call over to Lee Ann for the remainder of the financial review. Lee Ann?

Thank you, Mike, and good morning, everyone. Mike gave you most of the details on the revenue side and on the CW, so I'll provide you a review of expenses, adjusted EBITDA and free cash flow along with a review of our capital allocation activities. Together, third quarter direct operating and SG&A expenses, excluding depreciation and amortization and corporate expenses, declined by $23 million or 3%, primarily driven by our operational restructuring initiatives taken last year. Q3 2025 total corporate expense was $68 million, including noncash compensation expense of $19 million compared to $53 million, including noncash compensation expense of $19 million in the third quarter of 2024.

The $15 million increase is primarily due to onetime expenses associated with the expense portion of a nonrecurring settlement of a disputed customer claim and the proposed acquisition of TEGNA, offset in part by the release of certain reserves. 2025 depreciation and amortization was $190 million, matching the amount in the third quarter of 2024. Of these amounts included in our definition of adjusted EBITDA is $72 million related to the amortization of broadcast rights for Q3 2020 compared to $70 million for Q3 2024. The increase in amortization of broadcast rights by $2 million was primarily due to slightly higher programming costs at the CW versus the comparable prior year quarter given the mix of programming. 2025 income from equity method investments, which primarily reflects our 31% ownership in the TV Food network declined by $12 million versus the comparable prior year quarter, primarily related to TV Food Network lower revenue.

On a consolidated basis, third quarter adjusted EBITDA was $358 million, representing a 29.9% margin and a decrease of $152 million from the third quarter of 2024 of $510 million due primarily to the election cycle. Moving to the components of free cash flow and adjusted free cash flow. Third quarter CapEx, together with payments for capitalized software cost net of proceeds from asset disposals were $34 million, an increase from $31 million in the third quarter of last year. Third quarter net interest expense was $94 million, a reduction of $19 million from the third quarter of 2024. On a cash basis, this compares to $93 million in the third quarter of 2025 versus $110 million in Q3 2024. The reduction in interest expense was primarily related to a reduction in SOFR and Nexstar's reduced debt balances. Third quarter operating cash taxes were $33 million compared to $10 million last year.

As expected, our cash tax payments primarily in Q3 2025 and expected in Q4 '25 benefit from the One Big Beautiful Bill Act through the [ Marinne ] statement of bonus depreciation on CapEx and the ability to deduct amortization of internally developed software. The low cash tax in the third quarter of last year was due to the change of the timing of our tax payments using the annualization method. Cash distributions from the Food Network were $6 million in the third quarter, which amount is still captured in our free cash flow and adjusted free cash flow definition. This amount reflects our pro rata share of distributions to cover tax from our proportionate share of the income of the JV.

Included in the third quarter's adjusted EBITDA, but excluded from adjusted free cash flow is $22 million of income before amortization from equity method investments, which is primarily our pro rata share of Food Network net income in the third quarter of 2025. In Q3, programming amortization costs were lower than cash payments by $17 million as certain deferred programming payments were paid and certain future programming was paid prior to [ Aerie ]. As a result, consolidated third quarter 2025 adjusted free cash flow was $166 million compared to $327 million in last year's third quarter. A few additional points of guidance with respect to adjusted free cash flow, we are currently projecting CapEx in the $32 million range in capitalized software payments in the $6 million range in Q4. In addition, we will acquire 1 of our buildings subject to a long-term lease for $21 million. Based on the current yield curve and our mandatory amortization payment, Q4 interest expense is expected to be in the $88 million range.

Q4 2025 cash taxes are expected to be in the $45 million range. In Q4 '25, cash distributions from the Food Network are expected to be in the low single-digit million-dollar range compared to our share of adjusted EBITDA in the low teens millions and payments for programming are expected to be in excess of amortization by about $30 million due primarily to prepayment of future programming payments and payment of deferred programming. Turning to capital allocation in our balance sheet. Together with cash from operations generated in the third quarter and cash on hand, we returned $56 million to shareholders in dividends, repaid $25 million in mandatory debt repayments and did not repurchase any shares as we are conserving cash for our acquisition of TEGNA, which we expect will be more accretive than a stand-alone share repurchase strategy.

Our cash balance at the quarter end was $236 million, including $13 million of cash related to the CW, our debt balance was $6.4 billion. Because we designate the CW as an unrestricted subsidiary, the losses associated with the CW are not accounted for in the calculation of leverage for purposes of our credit agreement. As such, our net first lien covenant ratio for Nexstar as of September 30, 2025, which is now calculated on the last 8 quarter annualized basis was 1.73x, which was well below our first line and only covenant of 4.25x. Total net leverage for Nexstar was 3.09x at quarter end. These leverage statistics are calculated pursuant to the description in our credit agreement. With that, I'll open up the call for questions. Operator, can you go to our first question?

[Operator Instructions]. And our first question will come from Dan Kurnos with Benchmark.

Great. Two for me. Perry, I appreciate the update on the deal timing. It was implied yesterday that the SEC might address the cap in early and I appreciate all of the color you gave us around what you guys are doing behind the scenes. So I just wanted to give you the floor to maybe talk about why you're confident that the deal will close and close on time as you proposed it? And then for Mike, just a housekeeping question on the Q3 distribution stuff. I appreciate the color. Any more granularity you could give us? And is that onetime in nature? Is there any flow-through into Q4?

I think as it relates to the timing, I mean, the pieces are falling in place. The [ 8 ] circuit mandate was issued on October 21. That eliminates the top 4 ownership rule that will go into effect as soon as that order is published in the federal register and it's effective 30 days later. So we need the government to reopen for that to happen. We have prepared 37 applications seeking approval of the transfer of control of TEGNA's licenses to Nexstar as well as the request for waivers unless they are rendered moot by other rule making. And we, again, continue to believe that this administration, the Trump administration and [ Brendan Car ] at the FCC are focused on deregulating business, allowing businesses to breathe, allowing businesses to compete and that we've been spending a lot of time in Washington to reinforce at the regulatory agencies and on the hill that we are indeed here to help meet the regulatory moment, where it is, which all of which continues to point toward the regulatory rule makings happening in the first half of next year, concurrent with the processing of our application.

I will add that while there's a lot of work ahead of us in complying with the DOJ request, and I've read our FCC applications. I think they're very good and make very good public interest showing as to why this transaction is in the public interest. Which is, by the way, the standard at which the FCC will hold it to. But I can also tell you that internally here with several meetings over the last week in conjunction with our Board meeting in conjunction with the integration plans here. There is genuine enthusiasm in this building for this acquisition for the opportunity it creates to grow our business for the opportunity it creates to make sure that we secure a future for our business and the opportunities that we see downstream with 3.0 and spectrum, additional local content distributed across multiple platforms and allowing us to compete on a much more level playing field with big tech.

And all you have to do is look in the news that things going on around us to see indeed why these -- why deregulation and further consolidation to preserve local journalism and our industry is necessary. So there's a lot of work to be done on our end, but people are -- we have a coalition of the willing that has -- is really pitching in to comply with all the regulatory requests and to make sure it's done in a timely fashion.

To your second question on the distribution item, no, Dan, that was truly a nonrecurring onetime only anomaly that will not linger into the fourth quarter at all.

We'll go next to Benjamin Soff with Deutsche Bank.

Thanks for the question.So you obviously already have your big transaction in place, but I'm curious if you have any thoughts on what the rest of the industry might look like a few years down the line. in particular, are there any implications for Nexstar if the rest of the industry goes through consolidation or not? And then I have a follow-up.

I'll start from the end of your question back. I mean I think you -- a good strong industry needs to have good, strong companies comprising it. So we think that we will be the poster company for not only what the future of the industry will look like, but also the strength of our balance sheet management team, financial profile and the amount of local content that we deliver as well as leading on innovation for the industry. But we can't do it all by ourselves. And so we're very much in favor of having good and strong companies in our industry. And if that means they're good and strong competitors to us, well, hopefully, that will just make us that much sharper. So Mike, I don't know if you want to add more to that?

No, I think you've covered it. I think we're not afraid of competition by any stretch of the imagination. And I think Perry says, dealing with all of the forces around us, whether that's dealing with big tech on the advertising side, dealing with big media, whether that's the networks or other big media having others in the broadcast space that are good, healthy companies is something that we absolutely support.

Great. And then I'm just curious to get your thoughts on the outlook for the next political cycle. And in general, how do you view the dollars and how they might flow between broadcast and CTV in the future?

Well, we've already done our way too early 2026 political forecast internally here. And suffice it to say, we think that our company, based on our geography, even before the integration of -- the TEGNA acquisition will produce a prodigious amount of political revenue in 2026. And again, it's all based on our geography, the states that we're in, where we see toss-up races ballot propositions, redistricting, all the things that will cause money to flow or, again, way too early take is that broadcast will continue to be the dominant repository for political advertising. However, the fastest growing will probably continue to be CT advertising as it was in 2024. So no change thematically, and we do project that we will have substantial political revenue in 2026. And to those that follow the company, that should be no surprise.

Moving on to Steven Cahall with Wells Fargo.

I have a couple of strategic questions. So first, Perry, I made the mistake once of writing that you might be nearing retirement. That's clearly not the case. So as you think out to the end of the decade, we'll be in a different administration, will be in some different NFL contracts. What are some of your biggest priorities sort of post TEGNA that you still have in mind for the company as you look forward? And then pro forma for TEGNA, I think Nexstar will have local news and something like 80% of the country. we've seen your network partners not be shy about going into the streaming market where there's a lot of households that just aren't on linear. How do you think about your ability to be in the CTV market at that level of scale, whether that's working with a big platform provider or doing something on your own?

Sure. Well, let me speak to what we see post TEGNA. First of all, our eyes are on the prize in getting the TEGNA acquisition to and through the finish line, and we're going to run through the tape. So that is our total focus now. But I will say, I don't think that, that means that we are forever done with acquisitions. We will continue to look opportunistically for acquisitions that make good industrial logic and most importantly, our substantially accretive to the company. I think we've got a pretty good track record of finding those, and we will continue that quest.

I think also with the combined entity, we will have moldings reaching approximately 80% of the country. And I think that's the next big frontier for the industry and certainly for Nexstar, who will have more spectrum assets than any other company in our space. and the opportunity to develop monetization of the non-video uses of our ATSC 3.0 spectrum continue, in my view, to be the biggest value creation lever in our business as we know it today. And so that's -- we'll spend a lot of time on that. and then probably more to the mundane, but we need as an industry and Nexstar will need to lead this need to be much more sharp around our business processes how you buy and sell television time. It is inefficient from a cost and process standpoint for agencies to do business in linear television, yet look at the linear television revenue that is generated in this country, but it's not growing anywhere near the digital alternatives, which are much easier and cheaper to buy from a process perspective. we need to compete on a level playing field with the buying and selling of advertising with the rest of the industry. And I think if we can get to that point, which will require enhanced and better measurement, it will require enhanced and better processes.

But we've got some very big goals in that regard and see opportunity in the future. What if the World Series was going into the 11th inning and you had a chance to bid for inventory at the next break like you can in digital whether it's in real time or on some sort of a delay for those additional inventory spots that came available why can't we vision that and then make it happen in linear television. It's hard, but it's not impossible, but that's where the future is. So business processes, acquisitions and ATSC 3.0 will be our will be our focus post the successful acquisition and integration of TEGNA. I think your second question related to CTV inventory. It's interesting. I mean we are -- or and have rolled out CTV applications in the vast majority of our marketplaces. As -- and are producing alternative programming to fill the hours on those apps, and that will still be an emphasis in a growth area for the company.

But by the same token, why does anyone going to streaming. It's because they can't ubiquitously reach consumers outside of the pay TV ecosystem. Well, we do every day. It's called over-the-air television. And so while streaming and CTV will all be a part of our product offerings, our core tenet is people are trying to get what we've had all along, which is a direct-to-consumer relationship with our content and with our advertising messages. And by the way, we don't have to lose billions and billions of dollars to ramp that effort up it already exists. So I don't mean to be Pollyanna about it, but if you look at -- and I think we gave the example of what sports looks like on Amazon and what sports looks like on broadcast and what sports looks like on cable, you can put a lot of money into streaming, but you won't achieve the same results as you can, 1 to many with broadcast television, which is kind of our definition.

So I hope that's responsive to your question. but we don't see that as doom and gloom, it will be an additional competitive factor. But at this point, people are trying to duplicate what we already have.

[Operator Instructions]. We'll go next to Craig Huber with Huber Research Partners.

Perry, my first question is you talked about $300 million of synergies with TEGNA. I would think, if anything, that's conservative. Can you talk a little bit about how you get to that number just repeat that, if you would. And then with all those synergies here, once this deal supposedly closes, I would imagine it's going to free up a lot of money on your end, if you wanted to enhance the news programming, for example, at TEGNA, I've always viewed TEGNA as one of the better run companies in the group, but nothing is perfect, and I think you could potentially increase maybe the number of hours on the induced programming side for local, but also the quality of it even further. Maybe just touch on that, please. And to talk about what's better for the public. I mean, that would certainly appealing, right? That's the first question.

It would, Craig. And we have -- just through our desk review, identified 9 markets where we can create additional local news broadcast on stations that either have a de minimis presence or no local news presence using the combined power of the 2 stations in the marketplace. Dallas is a perfect example. WFAA does a fine job producing local news in the marketplace we have a CW affiliate that has a half hour kind of news magazine type program, but not a serious, credible local news effort. We can use the newsroom of WFAA and their people and maybe some additional resources to create a news presence on our CW affiliate here in the marketplace, which is right down the road from where I'm speaking to you from.

But there are at least 9 markets where we have those kinds of opportunities, and we are now in our discovery phase or diligence 2.0, if you will, which we'll do a deeper dive into the operating and financials of each of the operating business units. As we continue to look for additional opportunities and additional synergies. But at this point, we feel very good about the number and about the enhanced operating opportunity we'll have by virtue of making this acquisition, all of which you'll read about in our FCC filing once it's made. I'll let Lee Ann talk a little bit more about synergies

Yes. Craig, so I think as we've talked about on our call when we announced the transaction, there's about $300 million of synergies that breaks out very similarly to how the synergies broke out on the Tribune deal, which was about 45% from net retrans and the remainder coming from operations. And then on the operations side of things, that's really a combination of things. It's looking at corporate overhead, you don't need duplicative corporate overhead. We have a number of hubs that we use that we can expand to help service the larger station footprint. And then it's looking kind of within the operations for efficiencies.

We look at how we operate our stations versus how TEGNA operates theirs, and there are many areas where we do things a little bit differently that generates synergy. And then there's obviously the significant amount of 35 of 50 on markets that are the overlap markets that we can really operate 2 stations off of 1 infrastructure. And so that's an area where there's a significant portion of those synergies are coming out of that. As Perry said, this has been our initial analysis. We did a very deep analysis in terms of looking at line by line, person by person, what these costs could be, we're going to be in the market and doing a little bit more work and looking to see what else is there. I think as we also mentioned on a prior call, this really was reflective of the near-term pages.

What can we generate kind of in the next 1 to 2 years after the close. I think there are some medium-term synergies because there is so much overlap, there will be an ability for facilities consolidation, but that takes a little bit longer time, right? You have to move people, move sell a business or sell a piece of real estate and then benefit from those synergies. So we think there will be more over time. But for right now, we're feeling good about that number and look forward to providing you some updates as we kind of move forward.

I have one final just housekeeping question, Lee Ann. Are you guys still expecting gross and net retrans revenue this year to be flat versus a year ago for the full year?

We don't reupdate our guidance. That was our guidance for the year. As you know, in this quarter, we did have a onetime impact of an old dispute that got resolved in this quarter, and that impacted our revenue for the quarter. If we didn't have that, our actual distribution revenue would be up. And so you can start to see for the first 3 quarters of the year, that was flattish. And so you can kind of extrapolate from there.

And Patrick Sholl with Barrington Research has your next question.

I was wondering if you could talk a little bit more about the ADTRAN expectations that you laid out for the fourth quarter. I was wondering if there was like any specific like weaknesses in local markets or any category drivers of what you kind of called out.

I'll take that. We're not anticipating any sort of particular changes in the category. I think we're getting a little bit of sport spending money because of Missouri which is nice. But from a local perspective, I don't think there's going to be a whole heck of a lot of change in sort of the trajectory in terms of the trends for the third quarter versus the fourth quarter. I think where we're coming in the fourth quarter that's putting a little bit of pressure out of the numbers just relapping Nexstar the CW, which we had in the fourth quarter last year, we have in the fourth quarter -- we had in the fourth quarter of this year. And there's just some other kind of onetime items in our national digital business that have -- that are putting a little bit of pressure on that number.

And we'll go next to Aaron Watts with Deutsche Bank.

Clearly, there's optimism that 2026 will be a strong year of political spending. Typically, with that setup, we're used to seeing pressure on core advertising growth due to the crowd-out effect. That said, you'll have more sports on the air notably with NBC, broadcasting the NDA as well as other big sporting events next year. With the benefit of those incremental sports, curious if you think core advertising could be stable or even grow next year compared to '25 or at least perform better than it has in election years in the past?

That's really technical, Aaron. I think that as far as the Olympics go, it's the Winter Olympics to be earlier in the year, which is away from the peak political activity, so we ought to be able to monetize that pretty well with core advertising. I think it's hard when you look at the kind of political revenue that we'll run through the system next year to expect that you'll see core advertising revenue grow because the displacement will be substantial. We're not issuing guidance at this point. But listen, I think that if interest rates continue to come down and confidence continues to grow. We have resolution on tariffs and all of those things go into confidence and eliminating uncertainty, all of which I think is good for people's confidence in spending money on advertising. So I think we'll have more tailwinds than headwinds in 2026 overall, but it's too early to quantify the way that you'd like us to.

Okay. And if I could ask you one follow-up around sports, Perry. There's been reports that the NFL may look to open up negotiations on its media rights as early as next year. I think there's clear benefits to that for local TV broadcasters, but also some concerns. Would be curious to hear how your thinking about that potential and whether it is actually a good thing for you and the universe.

Yes. I'll take that one. I think on balance, we're optimistic about that. I think when you look at the trends that Perry talked about in his opening remarks, on broadcast, there really is a very sort of clarifying view of the ecosystem that broadcast brings more eyeballs, more viewers, bigger events than any other platform by far, right? You've seen that happen in the NBA with the move incremental games to broadcast from cable. We expect that will probably happen around Major League Baseball as well. You can see it on other sports.

So we think the NFL, given its traditional conviction around the importance of local broadcast will not be any kind of principle that they move away from as part of an early discussion. Certainly think an early discussion leaves the networks in a position probably a stronger position than they would be at the end of that deal. And to the extent that the NFL is moving any games to streaming, we really think that will be at the margin may be part of increasing the overall schedule to an 18th game and largely around potentially, I would think, producing a package of international game. So on the whole, we think that's actually a strong thing, and we think broadcast is going from strength to strength with this moment.

This now concludes our question-and-answer session. I would like to turn the floor back over to Perry Sook for closing comments.

Thank you very much. I'll just say quickly in closing that Nexstar's strong third quarter financial results extended our long-term operational track record, and we plan to put that expertise to work in our pending acquisition of TEGNA. We couldn't be more excited or more energized about our prospects here at Nexstar. In the near term, we see a decreasing interest rate environment. The reset of the majority of our distribution contracts at the end of this year the acquisition of TEGNA and an election year in 2026, all of which we expect to drive shareholder value.

Longer term, we expect to accelerate our CW and News Nation network growth strategies our deployment of applications for ATSC 3.0 and innovation around how we go to market and the products and services we bring to benefit our viewers and our advertisers. Thank you for joining us. We look forward to updating you on our year-end results in February of next year. Happy holidays, and have a good day.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.

Great. Thank you, everybody. Welcome to the Nexstar fireside chat at the Goldman Sachs Communicopia and Technology Conference. I have the privilege of introducing Perry Sook, Chairman and CEO at the Nexstar Media Group. And alongside him is Lee Ann Gliha, who's the CFO of Nexstar.

Perry founded Nexstar in 1996 and has over 40 years of professional experience in the television broadcasting industry. This is actually the first time Goldman has hosted the company at the conference since 2018, and a lot has happened since then. So we're looking forward to hearing about that.

In 2018, the company generated $2.8 billion of revenue versus $5.4 billion in 2024, almost doubling that revenue cadence, including through the acquisition of Tribune Media in 2019 and through organic growth.

Now with the help of expected regulatory relief, Nexstar is on track to significantly increase its scale again with the announced and proposed acquisition of TEGNA, another television broadcaster which if the deal closes, would increase the scale of the company to over $8 billion with EBITDA of approximately $2.6 billion before synergies on a last 8 quarters annualized basis through 2Q '25. This scale would make Nexstar even more relevant within the broader media and technology ecosystem and one of the most important broadcasters in the industry.

My name is Mike Ng, and I cover media, cable and telecom here at Goldman Sachs. We have about 35 minutes for today's presentation, inclusive of Q&A. First, thank you so much, Perry, and thank you so much, Lee Ann, for being here today. We really appreciate it.

Well, thank you for having us.

Yes. As we sit here at the conference, we are more aware than ever before about the impact of big technology, big tech on the impact of the media landscape. We've seen all the big tech companies launch some sort of consumer video service, get involved with sports rights that have historically only aired in traditional TV. Could you talk a little bit about some of the big changes that are happening in the industry, including some of the regulatory changes that may be important for the sector and for Nexstar?

Sure. Well, I think that at this moment in time, we are at a break glass moment for local television, local journalism. And those are Chairman, Brendan Carr's words, not mine, although I totally agree with his point of view in that our existential threat is big tech as it continues to move into, as you said, sports rights, local advertising, aggregating local content and just becomes a much more pervasive part of every screen that we have, but yet the local television stations, our -- and television station operators are limited to reaching 39% of the U.S. population.

So everybody said, well, how do they come up with that number? How does that make any sense? The point is it doesn't, right? And I think that the Trump administration and Brendan Carr, the FCC and similar leadership at the DOJ has realized and acknowledged that these rules make no sense in today's environment.

And furthermore, that there is a demonstrated public interest in maintaining a free and independent press, which in the -- at the local market level is primarily now fallen to local television journalism. And so I don't think anyone wants their local news delivered by a chatbot of unknown origin and unknown fact-based aggregation of content.

So we think our thesis is that you need big companies, strong companies to be able to attempt to compete on a level playing field with big tech, at least in the domestic U.S. And so that's the industrial logic behind Nexstar, getting larger and becoming larger and acquiring TEGNA to try and increase that opportunity to preserve local content and expand local content given the benefits of scale.

Yes. And when you announced the deal, I was surprised at the company's willingness to kind of force the issue of FCC ownership caps right now. I mean I agree with you that it's a completely antiquated rule like it doesn't really make sense just given all the competition in the broader media landscape.

Maybe you can just talk about what gave you all the confidence that we would achieve this regulatory relief to get the proposed acquisition of TEGNA through the finish line.

Yes. I'll take that. So we would not have announced a transaction if we didn't feel confident that we could get it through the regulatory authorities. We have spent a tremendous amount of time in preparation for this over the years and Perry in particular, as his role as the Chair of the NAB and really laying the groundwork with these regulatory authorities on that deregulation is needed.

What we have seen with the Trump administration is really a willingness to pursue deregulation, to pursue pro deal -- a pro deal environment. And so we feel like the door is open, and we're just kind of pushing on that open door to get this through.

There are a couple of different things that we need to have happen, one of which is we need to have the national ownership cap lifted. And what you have seen so far is Chairman Carr refreshed the record on the prior NPRM that was put out with respect to the ownership cap. Those comments were due on August 22. So there's opportunity now for him to take action with respect to eliminating that ownership cap.

And then we had a -- the other thing that we need in order to get the deal through is we need to be able to acquire 2 -- or own 2 of the top 4 rated television stations in a given market that's called the local television ownership role. We had the eighth circuit actually recently ruled that, that rule that the FCC has was not really a valid role and they vacated it. The FCC then did make a comment in support of that ruling. And so the plan from this point forward is to look through a series of waivers that we could get for those markets where we would have those overlaps or those 2 of the top 4 rated television stations, because it is well within the FCC's right to provide waivers with respect to that role.

So we feel like there's a good plan and a good path forward with respect to getting this transaction done by those strategies. And we really feel like the administration has been very supportive of the deregulatory environment that we're in today, and we're really just looking to meet that regulatory moment where it is. I mean would it have been great to have a change in the rule and then do the deal, yes, but we also have seen that this is going in a certain direction, and we really would like to execute on that before people get distracted with midterm elections and the like. And so that was part of the calculus around this transaction.

Great. Why don't we stay on the topic of TEGNA and the transaction for a little bit. Obviously, a substantial strategic move, it will expand Nexstar's reach to 80% of U.S. TV households, I believe. Could you elaborate on some of the specific market dynamics, competitive pressures that made TEGNA an attractive target for you all.

Well, first and foremost, I think the companies are a lot like similar balance sheet profile, similar legacy of providing local news to communities and as a service and high-quality and accurate information. If you look at the 2 companies together, pro forma, we will produce 450,000 hours a year of local news that is vastly more than any other company in the United States produces in terms of local information.

And we plan to increase that number over time with these combinations, which will allow us to add news to stations that didn't have the resources to be able to put on that kind of a product in major cities like Dallas and Houston and others. So there is a public benefit to this combination, allowing a bigger company, a stronger company to be able to fund local news development where a smaller company may not have had the wherewithal to do so.

We put out a synergy number that we have a high degree of confidence in bringing 2 companies together, $300 million. That's based on a fairly exhaustive desk review that we have done within the limitations of what can be done with 2 public companies prior to the announcement of an acquisition.

And Lee Ann and her team have done a tremendous job there. So we feel very confident in this just as we've gone through this process many times before, Tribune Media General total of 40 different deals since I launched the company in 1996. So we feel we have a very well-worn playbook, we can execute on the synergies, achieve them. We have an integration plan that I think is very well thought out and put together. And so we plan to execute on that playbook here as we go forward. And this was the biggest transaction, bringing the highest dollar quantum of synergies. And as we've said all along, we can reward our shareholders with a 20% accretion, basically just buying back our own stock. And so any acquisition to risk capital and management time has to be substantially more accretive than that, and this was one.

And it's also we didn't reach these conclusions on our own, the TEGNA Board considered all of their options to be a buyer or a seller and voted unanimously to endorse this transaction. So I think you've got 2 companies of a similar mind, an actionable transaction in a time frame that we think makes a lot of sense to, again, lead the industry toward the next era of consolidation.

Yes. And just following up on the $300 million of expected annual synergies, most of which I think happens within the first-year post closing. What are some of the key components of the synergies? What's the playbook? Is this retrans rate convergence is this more programming costs, and I'll put reverse comp in there as well or more operational synergies or maybe it's all of the above.

Yes, it really is all of the above. I think if you kind of look at our investor presentations and our past deals, the synergy playbook is really the same. It's really composed of sort of 3 or 4 different categories. The first category being net retran synergies, that's just really the effect of our contracts. It is a -- any in-market synergies that we might have from -- in this transaction, one of the benefits of the transaction is that TEGNA has 51 markets. We overlap with them in 35 of those 51 markets. So there's an opportunity for synergies within those markets. There's efficiencies just in general on how we operate our business versus how they may operate their business.

And then there's corporate overhead and I would call like hub-type synergies. We don't need to have 2 CFOs. We've got a back office for billing. Do we need to double that? Probably not. Those are the types of things that can also kind of come out of that synergy number.

I think over time; we'll probably find more opportunities for synergies on other things that we haven't even thought about. These are the ones that are really underwritable, very calculable. I think over time, we'll look to consolidate locations, that will potentially free up some real estate value and further reduce operating cost because we won't be paying property taxes and utilities and lawn mowing fees and things like that. But that will be a little bit longer dated in terms of the cost save plan.

Great. Perry, I was wondering if I could go back to something that you said at the onset, which was really about broadcasting's role in the broader media ecosystem, which has obviously seen a tremendous amount of transformation certainly over the last decade, even more if you look back further than that, which streaming competition and the like, so where does broadcast fit in when you think about consumers and advertisers and content owners with the kind of overhang of big tech and how they're kind of playing in the ecosystem?

Well, I would say, first and foremost, look at the newspaper industry, if you want to see what happens if you wait too long to deregulate. And so that's, again, this concept of a break glass moment that Chairman Carr and the Trump administration, I think, endorses here. And I think that if you look at what we do, and I've said this multiple times, this is the least sexy, most sticky part of the entire media ecosystem, right? We produce local content. That's our service. We help local businesses sell things. That's our commercial reason to exist.

And we do all of this in local markets around the country where our journalists and our salespeople live with the viewers and the advertisers that we do business with and have learned to be very good fiduciaries of their advertising dollars. You don't get a call center if you have a problem, you get to see somebody about that.

So we think of the local journalism we're providing is our essential service, it has also spawned our ability to develop NewsNation out of whole clot that was a rerun cable network prior. And so there's a distinct public interest to what we do and a public service to what we do. And that there's really no other place that provides an equal level of participation in the local marketplaces from a local journalism perspective.

Nexstar alone today has 5,500 journalists across the country. That's more than any other news organization to the best of our knowledge, on the planet that in terms of journalists in the United States. We have an 1,800-person sales force calling on many tens of thousands of SMBs across the country.

And we're in results-based advertising. The guy standing next to the cash register or a woman knows whether the advertising worked long before the agency reports back on the reach and frequency and all of that. So do they have more cash in the till on Saturday night when they close up than they did when they opened Monday morning, then that's performance advertising, and that's the business we're in.

So that last mile connectivity is something that we have uniquely, I think, that's special in the local marketplaces in that our branded content, our branded station relationships are with the consumer and the business owner at the cash register, right? And we have that ability to be that connective tissue and that is the most sticky part of the media ecosystem.

We don't have red carpet premieres, but we'll go to the opening of a supermarket, a car dealership, a grocery store, a furniture store. And -- but that's -- it's a very retail relationship, but it's also a very durable relationship. And that's the reason why we've chosen to invest primarily and almost exclusively into the local end of the entire media ecosystem.

Great. Perry, you've talked in the past about the role of a local broadcaster, Nexstar in addressing things like media bias, AI misinformation. On the flip side, you are a leading local broadcaster. So how do you balance what could be perceived as some as roles that may not have perfect concentric circles in terms of objectives, right, in terms of driving engagement in ad dollars and then being objective with news reporting.

Well, I think that we are, first and foremost, a journalistic organization and at the local level, again, there is no opinion, there is no over bias and independent agencies have looked at this and rated our newscast, both at the local and at the national level with NewsNation as high in enterprise reporting and accurate in terms of absent bias left or right.

NewsNation, for example, employs a rhetorician that was previously employed by the Vatican, okay? You can imagine how every word, punctuation mark is poured over by any statement made by the Vatican and her full-time job is to review content before it goes on the air, some after goes on the year for hints of bias and unconscious bias by the words that are used. And so we take this responsibility very seriously. We happen to believe that the largest swim lane in America is the centrist swim lane, which is the center of opinion, center of the country and where people agree on more things than they disagree on. And I think that's most people in this country.

And so that's the area where we think we're best at, again, given our local roots and what we will continue to try and provide is we call balls and strikes, we don't have any agenda other than that, and that's the essential service we provide. And so I think, ultimately, over time, that could be what sets us apart.

Right. The FCC has made some public statements around deregulation, being an advocate for broadcaster consolidation. I was just wondering if you could talk a little bit about how you see the competitive landscape in broadcasting evolving? What does this all look like an end state?

Sure. I don't know how far end state would go out. But 5 years from now, from an investment standpoint, I think there'll probably be 2 station groups that investors will care about, or should care about there may be others, but in terms of those that are interesting and meaningful. I think you may have 2. Lee Ann and I think that the networks will tend to hold on to their owned and operated stations, primarily as a source of cash if they don't see any higher value than that to fund other aspirations that they have.

And so I look at our company pro forma for the acquisition, will have, depending on the measuring stick, but we'll likely have cash flow or EBITDA that is equal to or greater than Paramount and equal to are in the same neighborhood of Fox. And so that's a different neighborhood and different kind of discussion than some of the peer groups that have much smaller market cap to begin with in local television broadcasting.

And I think many of those will be absorbed over time by larger players. And I think they're primarily family-owned, and I think the families will look at their future and generational wealth in what they want to do, and I think they'll probably come to the conclusion that they should monetize their investments. I don't pretend to speak for any of them, but I'm just -- you asked what the end state looks like, and this is one man's opinion.

And again, I think you'll have stronger companies that can provide more resources and maintain credible local journalism, which I think this country depends on. And so I think that's the public interest in this continuing to happen because otherwise, with the counterparties we deal with, it's not a fair fight, right? Because market cap or just resources. It's a mismatch. And so I think this helps to level the playing field, which can benefit consumers and local communities, which is the whole reason we're doing this in the first place.

How does Nexstar strategically position all of its local news assets to compete against some of the national news networks, I mean, what you described in terms of on-the-ground reporting and all of the assets you have in each of your markets, like seems really intriguing to me. And obviously, what you guys are doing with NewsNation is a part of that, but maybe you can expand on that a little bit.

Well, I think the strength of what we do is that no one goes home at night to say, "I want to watch a Nexstar television station". They go home to watch KRON here in San Francisco, KTLA in Los Angeles, News 8 in Tampa. And so no one at Nexstar says, this is what you're going to do in this industry, and I've never told anybody and no one in the organization other than at the local management level is telling anyone what to cover on any given day. There's no agenda there. It is to get it right and cover the most amount of news that you can to provide the biggest service through our communities.

So the flavor of what we cover and in Burlington, Vermont, is different than it is in San Diego, different in Portland, Maine than it is in Tampa, Florida. So we allow those decisions to be made at the local level as to what the taste opportunities concerns are in the local marketplace, and our coverage should respect that. So there is no one size fits all. And I think that diversity of opinion and geography and community is a strength of our company. So I think that's probably the best way to answer that.

Great. Yes. Maybe we can talk a little bit about the CW. That broadcast network has made, I think, a really remarkable pivot towards sports and sports-related programming, which I think you have said makes up over 40% of viewing hours. You guys have done extensions for the Pac-12. You have ACC content. How do you see CW's role within the broader sports media landscape? How do you think about your sports portfolio strategy overall?

Well, I think if you look at what we have done to date and where we have added the most value, it has been taking sports that were primarily distributed on cable or with captive to that distribution universe and put them on over-the-air broadcast stations through the CW network that have ubiquitous reach and reach those outside of the pay TV universe.

And so we're still playing moneyball as we continue to grow this network, if you will. And so we have the Xfinity Series on the CW, which is the Saturday race, not the cup race on Sunday. Now the anecdote there is the Xfinity race is on the CW and its affiliate group of owned and owned operated stations every Saturday and people know where to find that where quite honestly, the cup has gone from Fox to Amazon to NBC and FOX. And if you look at the year-to-date numbers, the Xfinity audience in total is up about 15% while the cup race total audience is down about 15% as well.

So there is value in making it easy for the viewers to find what they're looking for. And so with auto racing, with ACC and all of that, we would love to continue to expand our portfolio with a request from our sales department last week, our network sales department, could we please add more women's basketball in the first quarter because we have unmet advertiser demand. And so we're efforting with both the Pac-12 and the ACC to see if we can add additional games there.

So we're very opportunistic in terms of the rights. We are not in a position to outbid any established entity at this point in time. I will point out that Fox was in business as a network for 8 years before they made a bid for the NFL. So they had to grow into their sports portfolio as well.

But from our perspective, we're happy to talk to anybody that would be looking for superior distribution even -- we have folks on our air today that were offered more money by streamers, but they wanted to build the brand, wanted to be over the air and realize how special that is and how scarce those opportunities are.

Great. NewsNation, I feel like I could probably count on 1 or 2 hands a number of basic cable networks that are seeing growth in subscribers and viewership and NewsNation is one of them. Could you talk a little bit about the NewsNation brand, the audience programming initiatives that you're pursuing to grow that and the outlook on affiliate fees and advertising within that network.

Yes. I mean I think the NewsNation was created out of the old WGN America, which was part of Tribune, which we acquired in 2019. And at the time, we saw the opportunity to kind of move it from just a network that was entertainment base to one that was news based. And if you look at just sort of the top 10 rated networks, perennially, it's the top 4 broadcast networks, but then it's also cable news networks.

And we saw that opportunity to really fill a hole that was in the cable news environment with being able to be really kind of the middle of the road, but entertaining type news programming. And so that's really been kind of the focus over time and really has what been helpful in terms of growing that audience base.

Just celebrated our fifth anniversary on September 1, and we started with 3 hours a night in prime time and now we're 24/7 cable network, fully distributed Monday through Sunday and started with literally no audience, right? It was a startup from scratch programming service.

And we now are -- our awareness is into the 40% range in terms of consumers and among news viewers, it's in the mid-50s. And so from a standing start, and again, programming to people that want facts, and if it's opinion, clearly labeled this opinion to hear both sides of the story, most of those people had left the cable news ecosystem because they said there's nothing here for me. It's either way right or way left, people yelling at each other. And I don't -- that's not what I want to ingest. And so we've been building this audience from scratch have been very gratifying.

Our audience numbers were up 67% year-over-year last month. And we were the fastest-growing cable network period, not just news but of all cable networks. And you're right, there were only a couple of handfuls that actually could demonstrate growth, but over the last 12 months. So often pleased, never satisfied, but the growth has been there, and we will continue to grow.

Great. I wanted to ask a little bit about your spectrum holdings and plans for that. As a TV broadcaster, you guys obviously have a tremendous spectrum portfolio, some of which arguably is a little bit less utilized than it was. But what are the opportunities for you to utilize some of that spectrum in the spirit of public service? And what are your plans there?

This is one of the things that we're really excited about in terms of the future for the company longer term. And we do have -- we cover 70% of the U.S. and it's about 2.6 billion megahertz pops. That's our spectrum on a stand-alone basis. What we've done is we've taken our spectrum and put it into a joint venture called EdgeBeam Wireless along with Gray and Sinclair and Scripps. And so we've got now sort of almost the whole industry sort of talking with one voice.

And the plan here is that we have been able to really change the technology that we use to broadcast from what was the standard was called ATSC 1.0 to the new standard, which is ATSC 3.0. And what that does is it enables us to transmit our broadcast signal using less bandwidth. So we can then utilize the remaining portion of the bandwidth for high-speed data transmission that we can lease to third parties and to really provide a very cost-effective way to deliver data.

And really, the reason -- part of the reason that it is so cost effective is that if you think about some of these other spectrum that's out there, and all of the cost that has to go into developing building towers to building out that whole infrastructure. We already have that. We already have towers across the entire country based on what we've got from our television broadcast business. So we don't have to go and replicate that. So we can be the low-cost provider with respect to that high-speed data transmission.

So what's happened so far is we've been able to really convert over television stations that cover over 50% of the population for us to that ATSC 3.0 signal. And we are actively working with this EdgeBeam Wireless joint venture to develop the business cases and to work with potential new customers for that spectrum.

And then as we sort of see the consumers migrate to television sets that can receive ATSC 3.0 or to acquire converters that can do that, then we'll be able to move off of that 1.0 signal and move to 3.0 and really kind of monetize that over time. So very excited about it.

Great. I was wondering if I could ask a little bit about just the state of the current advertising environment for you all national, local, certain specific verticals, like where are you seeing pockets of strength and -- versus weakness?

Yes. Look, at the beginning of the part of this year, we had some curveballs thrown at us and everyone was very concerned about what the potential impact of tariffs would be. And the long and short of it is, it wasn't as terrible as everyone thought it was going to be was nothing that sort of no one fell off a cliff or anything. I think the benefit that we have from our advertising base is, if you look at our overall advertising, about 60% of our advertising comes from services-based businesses versus goods-based businesses.

So our largest services-based categories, attorneys, we also do really well with like home repair and manufacturing, which are things that are not as impacted by potential tariffs. And so that -- those have been -- those categories have been doing well.

On the flip side, we've had some negative impact from auto as we've seen that segment has been impacted by tariffs. It is our largest category. And so that's provided a little bit of a headwind for us in terms of the advertising growth. But so far, in the second quarter, we had our advertising for nonpolitical advertising was down only about 2.5%, which we felt was a positive given this economic environment.

Perry, just to close things out, I was wondering if you could just tie it all together for us and talk about where you see the key priorities and strategic areas that you're focused on over the next 12 to 24 months?

Well, obviously, we are working very feverishly to go through the regulatory process, obtain regulatory approval for our transaction. And we'll be laser-focused on achieving those synergies and integrating the 2 entities into one company. So that is first -- that is job one.

I think when we feel that's well under hand, we will begin to maybe consider what other M&A opportunities are out there being mindful of leverage and cost of capital and actionable transactions at reasonable prices and all of those things, but that's the same as it ever was.

And from an investor perspective, I think what begins to lay out in media is you'll have your streaming favorite. You'll have your network's favorites, and you'll have one choice if you want to play the local media part of the ecosystem or cover the entire media ecosystem, and that one choice will be Nexstar.

And I think it will be well capitalized, hope it will be well run and will be the alternative for you and that investors will benefit from an efficient deployment of capital across the 3 different elements of what we all consider media.

Great. Well, Perry, Lee Ann, it's been such a privilege to have you on stage with us here. Thank you so much for your time today.

Thank you.

Thank you.

[Audio Gap] here at Bank of America. And I'm pleased to be welcoming the leadership team from Nexstar Media Group. With us today are Perry Sook, Chairman and CEO, who founded the company in 1996, has led its transformation into a local broadcast immediate powerhouse as well as Lee Ann Gliha, EVP and CFO, who supported Nexstar's continued growth since joining the company in 2021. So thank you both for joining us again.

Thanks for having us.

Great. So let's get right into it. Perry, you spent over 2.5 decades scaling Nexstar's local broadcast TV assets. You've been a vocal champion of the industry. They are helping the industry deregulate with the recent announcement of the acquisition of TEGNA as well. We've seen the FCC make a number of positive comments and supported deregulation. In fact, we had a member of the FCC here yesterday. What makes you confident that you'll be able to achieve regulatory approval before we get to the specifics of TEGNA, but just regulatory approval and would love to get into some of your vision for what needs to change?

I think it starts at the top of the government with the Trump administration and a focus on deregulation and eliminating needless and outdated regulation. And that flows through to the regulatory agencies, the DOJ and the FCC. And in particular, I think Chairman Carr has been very adept and very clever at taking an open rule-making proceeding on eliminating national ownership cap that late [ Dormant ] through the Biden administration and the Rosenworcel's FCC and reviving that by refreshing the record. And so now I think that all the comments are in, and I think most notably, the last comments that were filed in the reply comment pleading cycle, which is why these things take a while. Was a unity petition filed by the National Association of Broadcasters, Sinclair, Nexstar and then 3 of the 4 networks that also filed in support of eliminating national ownership cap which was every network owner with the exception of Comcast.

So the universe of local broadcasting and as well as the network owners are speaking virtually with one voice that this is an outdated regulation. We don't compete against each other. We compete against big tech. And we need to be unshackled from outdated and outmoded regulations. And I think we have a pretty clear line of sight that, that is going to happen, and I have a high degree of confidence in the Trump administration and the heads of the FCC Brendan Carr and at DOJ from Pam Bondi to Gail Slater that they will look at these regulations in the light in which they exist today, realize they make no sense and eliminate those barriers to our industry growing.

And so maybe if folks listening aren't fully clear, is the TEGNA acquisition contingent on getting that regulatory approval that cap lifted?

Well, the FCC can always take actions on transactions, they believe to be in the public interest. We believe that the pendency of a order eliminating the national cap will happen sometime before the end of the year. It could happen as early as this month. But may or may not happen because the Chairman has to digest the comments that were filed and write his order, but we certainly believe that the line of sight is that the national cap will be eliminated, and that will be during the pendency of our FCC and DOJ approval processes.

So at that point, then you're dealing with the local ownership rules, which the Eighth Circuit Court has already vacated the prohibition against owning 2 of the top 4 rated stations in the marketplace that has yet to be signed in the law, but that is fairly imminent. And then we believe that down the road, the FCC will launch a notice of proposed rule making to receive comments on the local ownership rules that would remain and whether they should be eliminated or modified in any way. So we think that the administration has been consistent that they want to eliminate unnecessary and outmoded regulations and that they're making good on that vision and that promise.

Absolutely. So just turning specifically, there's a lot of different aspects of the media sector that you and your company have looked at or have been involved in through the years, whether it's traditional broadcast networks, cable networks, sports assets, what continues to make the broadcast model attractive to you? Why TEGNA?

Well, I've said in other conversations that the local media space, which has largely been ignored because everybody is focused on networks and streaming and top-down in National Media, the local media space, which has been ignored is one we've chosen to build a dominant position in. And it's that last mile connection with both the viewer and the advertiser that I say is the least sexy, most sticky part of the media ecosystem. In the upfront that was just concluded, the national media holding companies did business with the national agency holding companies and probably 5 dozen maybe a few more advertisers place business in the upfront. So it's very concentrated, big dollars, but from a fairly short list of clients, contrast that with us. We have over 43,000 different customer SKUs in Nexstar. So different SMBs that we do business with across the 40 states in which we operate in. And the dollar volume of each may not be hugely significant, but the collective dollar volume, it's a large tail and a much more diversified revenue base than at the national level.

And again, we don't have red carpet openings or premieres, but we go to the opening of supermarkets or car dealerships or furniture stores. At our essence, we are a local service business. We produce local content that is relevant, interesting, informative, contextual, accurate, not biased at the local level. And our business really do exist as we help local businesses sell stuff. All transactions no matter whether you're buying from a digital website or walking into a store, happen at a local level, and we are at that point of purchase with a branded relationship with both the viewer and the business owner. And we have this better than 2,000-person local sales force that's a huge asset, right, that in our 6,000 journalists, it's prohibitively cost ineffective to try and build something to compete with that.

So it's kind of got a built-in moat. There a lot of people would like to aggregate local content. A lot of folks have tried to build local sales forces to sell digital assets, none have been successful so far, not to say that they won't continue to try. But we're already there. We have those relationships. We have proven to be good fiduciaries. You don't have to call a call center, when you have a problem that you didn't get your fulfillment on your digital ad buy or your spot in run because the ball game ran over in the late news didn't run that night, you see that person at a service club over the next week at a school PTA meeting or whatever.

And so we're at the touch point. We can do local activation at scale, which is really what all advertisers want. And the whole reason advertising exist is to make the cash registering, and we're very close to that point of purchase. So that's the unique selling proposition and really what all advertising is there to do, which is to move product, and we're at the point of purchase. I mean you couldn't ask for a much better position than that in terms of the media ecosystem, which is why we've chosen to focus and specialize in the local moat.

Thank you very much. Yes, understood. So your company has been a very successful and famous kind of consolidator of some other big assets, Media General in 2017, Tribune, I think 2019. How do you think about the TEGNA acquisition in the context of some of those success stories for you guys? Is there a playbook that is still valid? Is there -- how has it evolved and what you might do post acquisition?

Yes. I mean, look, in a lot of ways, it's very similar because it's a television broadcaster by television broadcasting company, and we've really done a lot of the same work in terms of determining what those synergies can be and looking at that opportunity. The difference is that this time, we've got 35 of the 51 markets that TEGNA operates in our markets that we are also in. And so it's a little bit more of an opportunity in those markets that can be incrementally helpful.

I think the offset to that is when you think about what's gone on since the last deal we did, which was Tribune in 2019. And today, a lot of companies have taken the opportunity to kind of rationalize their cost base already. So there's a little bit less meat on the bone, but then that's offset by the fact that we've got a little bit more of this overlap market opportunity that's coming at us.

Great. And now if this vision for deregulation or we had Olivia Trusty yesterday and she kind of borrowed some of the line which you were saying, but getting rid of outdated or regulations that have outlasted their relevancy. If that's achieved, how do you see your industry or even the broader media industry evolving over the next 5 years? Is it going to look very different? There's just going to be a little more consolidation? Is there any other kind of knock-on effects you can envision?

I think at the local level, how we do what we do could continue to evolve, how we reach the consumer, how we deliver the B2C message to the consumer from the business owner that could change the delivery mechanism or we just have more opportunities to do that, display our content and deliver advertising messages, but it doesn't change the basic business reason that we exist.

I think structurally, there will be more consolidation, you need big, strong companies to even attempt to have a fair fight with big tech. And no one wants their local news delivered from a chatbot. So there was a vested interest, I think, there's a national interest in having a free and independent press. And when you think of what's happened in newspapers, what's happened in radio, the last bastion for free and independent press is local broadcasting newsrooms. And so I think that 5 years from now, there'll probably be 2 companies that are in the local station business that investors care about. There may be some more companies that are in that business, but they may not be public or may not be -- company is big enough for investors to care about it. I think you'll probably have to 2.

The interesting thing is, I think we have a first-mover advantage in that if the transaction proceeds to the finish line as it's constructed, we'll reach 80% of the U.S. our next closest competitor reaches approx mid-30s percent of the U.S. So there's almost not enough to buy of viable TV stations to build a platform locally to compete with us. But I mean, I think there will be some additional consolidation in addition to whatever we may decide we want to follow on the transactions with once we have executed on the TEGNA acquisition.

Excellent. So just kind of switching topics a little bit, turning to sports, and we just heard from one of the biggest names in sports, ESPN and Jimmy Pitaro a few minutes ago. But ESPN is entering with its unbundled streaming product very soon or is already in the market, Fox One. What are the implications, if any, for this kind of unbundling of some of the sports products or DTC sports products in the market for your business or the subscribers or viewership or anything?

Perry, maybe I'll take that one. I think we're optimistic that the advent of Fox One and ESPN will be neutral and potentially net positive for the pay TV industry. We know that both Disney and Fox are very invested in the success of the pay TV ecosystem on a go-forward basis. They both have substantial other assets that benefit from making sure that, that is a viable ecosystem. And they've really designed these products to be complementary to the overall pay TV product and not cannibalistic. We think that -- and that's really evident in the pricing that they put out. It's really kind of respectful of the wholesale pricing that you -- that we are seeing sort of overall at $50 combined for Fox and ESPN, really you kind of have to make a decision. Do you want to do that? Or do you want to just buy the full pay TV bundle?

And I think the other piece of it is, these guys have said, specifically, they're focused on targeting the Cord Nevers, so people that are the cordless audience. And so if that is the opportunity, we think that could be potentially incrementally beneficial for us, especially with the Fox One product, where we will -- our stations will be participants in that Fox One product, and we'll be able to benefit from that. And Fox One viewers will have the ability to watch our full content.

Does that work? Is there like a retrans or a fee that you get from -- you said you participated in that Fox One? How does that...

Yes, it will be similar to the MVPD [indiscernible].

Okay. And is there any thought or impact to Netflix, Amazon, Big Tech have been bidding on sports rights and getting more involved directly in sports in the last few years, is that change the landscape meaningfully?

Yes. I mean, look, they've got involved. I think it's been -- there's been a lot of highlights and commentary about it. But if you look at sort of the overall the lion's share of the sports rights are still with the traditional media companies. I think the broadcast model and sports are really a marriage made in heaven. You -- if you are a sports owner, you want to make sure that you've got the widest possible audience and the best ratings. And the best way to get fan engagement to get audiences at your events to have that sort of really fandom and creation of brand value and team value and franchise value is to have that engagement with respect to the broadest audience you can have, and that is broadcast.

And then we've seen that with even just at a microcosm of the whole world with NASCAR, right? We took on the NASCAR Trinity Series this year. Last year was predominantly on cable television. We've had double-digit increase -- percentage increase in the ratings. That's not the same as what's happened with the cup, where it's been the opposite way because they've moved from broadcast to streaming and to cable television. And so I think that broadcast is a scarce commodity out there as well, and there's only a limited amount of slots. And so there's -- I think there's always been to be a home for sports on broadcast television because of the real benefit that it brings to those overall teams and leagues.

Absolutely. So now another important asset of your firm. You're a few years into owning and operating the CW. Can you give us an update on that business and that network? I believe profitability has been improving. When do you expect it will be cash flow positive or contribute to company EBITDA?

Yes. I mean look, we're doing what we said we were going to do, right? We have targeted a breakeven time frame of the 2026 year. We're still on target for that. It's kind of -- if you look back, the -- when we bought the business, it was losing hundreds of millions of dollars, that was spending a lot of money on original programming that wasn't rating very highly. What have we done? Well, we've completely transformed the programming lineup for the CW. We now are broadcasting over 40% of the hours that we're broadcasting are sports programming. We've increased the number of hours by 40% as well by adding on that sports programming on the weekends. We -- over 400 hours of programming that we do on the sports side. And we've done all of that while reducing our programming costs. And that's really just a testament to really being efficient with the dollars that we had to put to work.

I mean, we've not -- we've put dollars to work here, but it's been far fewer dollars than being previously spent on that original programming. It is now programming that's just much more interesting for the broader audience that's tuning into broadcast television to be watching. So we're very excited about the transformation that's happened, the success we've had. We've had continuing growth in prime time audience. I think it's been 5 quarters in a row of prime time audience growth.

In the first half of the year where actually CW is the #8 in terms of all rated networks in the country, which is phenomenal. And so we're looking forward to continuing that opportunity on a go-forward basis. Not to mention the part that we sort of gloss over when we talk about this path to profitability, but it's that we've been able to bring back a number of CW affiliations that were on third-party distribution and bringing back on to the Nexstar television stations, which has been incrementally profitable for us because we've been able to monetize that through our own distribution contracts. And so when you bring it all together, it's been -- we feel very good about the outcome here so far.

And I would assume that having higher ratings, more engagement, sports, which is sticky loyal content with passionate viewers would strengthen your hand into these affiliate renewal discussions whenever they come up. And if that -- if I'm right about that, and those renewals go well or better than feared, does that pave the way for you to continue investing more in sports? Is it -- or is there anything about it?

No, you're absolutely right. I mean, look, we've chopped a lot of wood with respect to the operating expense side of things. We've transitioned the programming. Now we're all about executing on the revenue side, right? How can we monetize these eyeballs, get the audience growing, generate more advertising revenue because we have more audience, but then also monetize it with our affiliates in terms of the value that we're bringing to them because now what do they have to offer even talking about our own stations. What were they airing on a weekend previously? Was it a paid programming? Was it a movie? Well, now they've got NASCAR on Saturdays at ACC football and basketball. And all of these great content, professional bull riding and the professional bowling league now and Pac-12, so it's a lot of exciting stuff that can be -- that's incrementally beneficial to the stations.

Great. And while we're on that, we're talking about revenue, 2 main buckets of revenue, advertising distribution. Why don't we talk about advertising a little bit. This year has been kind of a weird macro year. We had tariff concerns, which impacted the auto industry and other big industries that I know advertise a lot on TV. How are you seeing your local national advertising platform? What are you observing in the ad market broadly?

Yes. We've been -- it's not been any sort of crazy fall off that people were worried about with respect to the tariffs, I think has it been a little bit of a bumpier year than what we thought it was going to be at the beginning? Yes. But has it been any sort of major negative? No, I think it's pretty much business as usual. We have seen a negative impact from auto that has been directly related to the tariff situation. But I think people have seen that kind of across the board.

I think we benefit a little bit from -- if you look at our overall advertising pie, we have about 60% of our revenue comes from services-based businesses rather than goods based businesses, which does help insulate us a bit from that impact of the tariffs. Our #1 services category is actually attorneys and they're not really impacted by any of these tariff-related issues.

Another area of revenue importance for the network -- for the broadcast stations is always political. Any early thoughts on the midterm political cycle, how you guys might benefit or any [indiscernible] there?

Yes. I think ad impact came out with some article yesterday, I believe, saying that they thought that the political advertising spending would be up about 20% in the cycle versus the comparable cycle, which is good. I think they've predicted that broadcast would be about -- would be about the same from the prior cycle to this cycle. So we're feeling great about it. I think broadcast continues to be the #1 place that political candidates put their dollars to work because it is a very concentrated local election and a local audience that we deliver.

All right. Great. And then obviously, one of the concerns or things weighing on this entire industry and not just local stations has been cord cutting. So is there a view that this is abating, stabilizing, plateauing, does it need to? So just any general thoughts on what you guys are observing?

Yes. I mean, look, we're observing the same thing everybody else is observing, which is like you're starting to see a little bit of positivity out of the likes of Charter and similar companies that have really done some good work in rebundling all of these direct-to-consumer platforms and creating more value in the bundle. You're seeing the economic benefit from cord cutting less and less to the consumer.

I think we pointed out in a couple of prior meetings that if you just look at the composition of the people in the pay TV ecosystem, it's primarily now the folks that are interested in sports and live news. And so there's -- the people that really were not interested in either of those things are mostly out of the ecosystem. So all of these things point towards the ability for the rate of subscriber attrition to decline. We haven't quite seen it yet in our numbers. But we're looking out there and we can see that we -- there is an expectation amongst most research analysts that, that overall rate of decline will continue to abate, not be gone, but be lower.

Right. So NewsNation, one, could you, I guess, remind the audience a little bit what this asset is because it's evolved over the years, it's become really significant. It's now a 24/7 operation news channel. What -- how would you describe your current positioning in the cable market? What KPIs are you must focused on as indicators of success in this business? Just thoughts there.

Sure. Well, we celebrated our fifth anniversary as a news network on September 1. We launched 5 years ago with 3 hours a night of basically a newscast in prime time that has now worked into a 24/7 network that has opinion shows, has Washington DC-based shows, has crime-based shows, a more full-service network and it started as a counter programming strategy but has evolved now. And last month, it was the fastest, if you measure the last 12 months as of last month, the last month for which we have data, it was the fastest-growing cable network of all networks over the previous 12 months.

So the KPIs for me are awareness and growth when we started. I mean, obviously, we went from a WGN America, which was a rerun network basically to news. So we started with zero awareness, right? We're now up to about 40% awareness in the general population of NewsNation in 5 years, that's really gratifying. I think that if you look at news viewers to cable news viewers our awareness is closer to 60%. But that still means almost half the country, we still have to introduce ourselves to and continue to build our awareness and share of mind and share of voice.

It was developed again on the back of our local journalists, which we employ approximately 6,000 across the country, which is the largest number of journalists employed in the United States by any news gathering organization in the world. And so delivering what they do, which is a fact-based objective reporting and overlaying that into a national platform and where we really shine, and we have great shows, Chris Cuomo and Ashleigh Banfield and Elizabeth Barcus, Leland Vittert all do a great job with their shows in prime time, which were guests in opinion.

But we shine with our breaking news coverage and our just general news coverage. And when the L.A. wildfires unfortunately happened. KTLA, our NewsNation affiliate and our very strong, very fine local station in Los Angeles was front and center on our coverage. And we not only were there, we were at street level. We knew the street names. We knew the public officials names before anybody could come in from a national network and begin to assemble their stories same with the floods in Central Texas. We were there not only during the rescue operation, but with the relief operation as well. And so when we were -- when the President was shot at in Butler, we were on the air from Butler carrying that live when most of our competition was in tape programming because it was the weekend and the way you save cost in a mature organization is to not have original programming.

So we're -- by and large, we're 4 hours a night of what I would call opinion shows that repeat overnight, but the rest of the broadcast schedule is live news from Chicago, from D.C., from New York covering all aspects. I mean we spend a lot of time on the border. We spend a lot of time talking about the surplus of the corn product and can that be monetized at a rate that farmers can get their money back and cover their operating loans because there's so much of it, the prices are depressed. I think not everything has to happen in the Acela corridor. And so I think that's the strength of the network as well, serving the center of opinion, highlighting the center of the country and providing an alternative to the other choices that are out there that are generally biased to one direction or the other. And we said the largest swim lane in America is probably the 60% of the country that basically agrees on a lot of things, but that opinion doesn't get expressed because the air is occupied by the extreme -- the far extremes on the far right and the far left.

So I've been very pleased with what we've been able to build in 5 years. And the network probably has an asset value to us of something shy of $1 billion as an operating entity. It's been profitable since day 1 because WGN America had an existing distribution revenue base and existing advertising base. We've turned all of that over but the way we finance the growth of the network was when contracts for syndicated programming expired, we plowed that money into journalism, which it took us 4 years to build from our initial start to a 24/7 news service. And so it was -- other than the capital cost, it was all financed organically. And success looks like what CNN is as a financial model, which is probably worth $4 billion or Fox as a financial model of Fox News, which is probably worth $9 billion. So anywhere between where we are today and where they are is what I consider success. And obviously, the more successful we are, the happier I will be.

So it's growing awareness. It's growing our ad base. We gained share with both the CW and with NewsNation in a challenging national ad market because we were selling growth in a declining cable universe or declining traditional linear television universe. And that will take us so far. But at this point, all I can ask people to do is take what they've been given and grow it and make it better. And to that extent, I've been very, very pleased but never satisfied.

Well, I'm glad you're spending time talking about it because I think there's a perception of some of what's gone in the broadcast industry as its roll ups, it's consolidation, it's M&A expertise, which you all have demonstrated time and time again. But I think this is a great example of organic innovation with the assets that you have and leveraging these assets and literally standing up a cable network from zero. So I think you deserve a ton of credit for that in addition to the M&A part of the story.

So just getting back to, I guess, a little bit of the regulatory environment and where we are in 2025, I would just love you to just opine a little bit about like how can things be better? And you've worked in this industry for a long time. It's been heavily regulated, overregulated relative to -- I cover the rest of big tech, too, which has been probably underregulated and not regulated so you guys have won this regulatory burden forever. What's your vision for if the Trump administration and the teams you're talking to in Washington, kind of side with you and kind of hear this voice. How is it going to serve consumers better, advertisers better, that kind of thing? Because I'm sure that's going to be a question they all.

Sure. Well, I used the analogy that some people limit the loss of A&P grocery stores or Jewel Tea grocery stores or Pathmark being replaced by Walmart. But then when you fast forward to where we are today, Walmart is a viable alternative and local choice as compared to getting all of your groceries, all of your deliveries, all of your merchandise from Amazon. And so I think consumers benefit from having a local choice.

Same thing in local news. Do you want all of your news from a chatbot delivered by YouTube or Google or Apple or Meta or do you want a local choice with 6,000 journalists around the country trying to do their best to report on the news fairly for a local platform that they can find its way into a national platform. And I think that the country has a vested interest in maintaining a free and independent press at the local level, and that's what we do.

And so how could things be better? All of the outmoded regulations could go away by the end of the week in the cost capital could be down about 300 basis points and things will be better. That would be great right? And so I'd be happy. I don't think that is all going to happen. But I think over time, all of that will happen. So -- and people said, well, how come regulations haven't change?

Well, you have the ability in a regulated industry to change rules, but you also have a comment period, right? And I think Chairman Carr at the FCC came out the other day and said, "I'd like to shrink the public comment period from 30 days to 10 days." If you got something to say you'd say, why do we have to have a 30-day comment period, and then a reply comment period, why do transactions take 6 to 9 months to get done. It's because of that process that is in and of itself may be outmoded, you don't have really a public comment period of Meta buys an AI company, right? They just decided they want to do it. And if it gets through an HSR review, then they can usually get that done.

And so I think that -- I think things are changing, and I think they are changing for the better. And we haven't even talked about spectrum yet. That could be another half hour in terms of that opportunity and the value creation opportunity for local broadcasting. And guess who will pro forma for this transaction have more spectrum assets in the country than anybody else. You're listening to them or looking at them right now. So we think that's a huge value creation lever data casting with ancillary uses of our 3.0 spectrum. So that's layered on top, that's hidden asset value, that's a zero call option appropriately priced maybe at the moment.

But I think there's a lot of things -- I'm more excited about the next 5 years than I have been even in the last 5 years in terms of the opportunities that are in front of this company, the opportunity to change an industry to evolve an industry to lead once again, whether it's virtual duopolies, whether it's retrans revenue or whether it's now helping the regulators open the door, push open the door that's already open and give them an incentive now and a reason to do what they are planning to do, which is to clearly wait for the transaction by eliminating the prohibitions to it and outdated regulations.

So we're excited to be, again, kind of leading our space, which is the local media industry to a better place and are confident that we're going to be able to be successful in doing so.

No, I think the market is extremely excited. I think we're in lots of sectors, we're awaiting the deregulation trade, and I think your acquisition of TEGNA has proven to be hopefully a positive catalyst, getting things accelerated. Why don't we talk about that ATSC 3.0, what are you seeing as the most promising applications for this. Can you explain it a little bit and touch on the spectrum asset?

Sure. It's much like those of us to remember the change from analog transmission to digital transmission, more efficient use of the spectrum. Well, this is transitioning from ATSC digital to 3.0 digital, which is an Internet-based technology. So it's compatible with every device. It's compatible with the rest of the world. I think Venezuela just announced that they were going to go through to a 3.0 standard as South Korea and other countries. So -- but what it does is it's more efficient use of the spectrum. So where I can maybe put 2 HD signals and a couple of SD signals, multicast channels on, I can do a dozen of those with the same spectrum. Or conversely, if video is not the highest and best economic use of the spectrum, we can get into Internet datacasting. We can do video to the connected car. We can do a 3D navigation system projected on the windshield. We can be Internet backhaul for big data files that we can transmit overnight that take a lot of bandwidth.

Who has watched a sporting event, a live sporting event on the Internet, glitch-free ever. And I don't think anybody in here would raise their hand. Well, Internet was never meant to be one to many. We can be one to many in datacasting. We can provide a backup GPS system for the United States, which doesn't have one, which President Trump said in his first administration, it's in the national interest to have one, both the DOD and the DOT agree with that, and we're working toward making meaningful progress to providing a terrestrial-based back up to GPS and that's in the national interest to do so. And that's just another use of our ATSC 3.0 spectrum, which we think will catalyze the transition, right? It's not like we got a second channel, and we one day turn this one off and turned this one on. The transition will have to be kind of a flash cut because we're doing it all on the same channel and it will have to happen regionally and roll across the country. It's hard, but it's not impossible.

But the payoff is I think that 10 years from now, maybe 5 years from now, ancillary uses of the spectrum will contribute as much revenue, more revenue than we get from selling advertising and potentially as much revenue as we get from distribution today. And just from a valuation perspective, if you look at the amount of spectrum that our company will control and multiply it by [ $0.93 ] in the last auction or AT&T paid $1.5 yes, earlier this week to Charlie. That implies a multibillion dollar value to our spectrum.

Now we're not going to sell it because that eliminates our ability to transmit. But when you just think of hidden asset value under -- it's just like having shale oil and shale gas in Texas, it took 20 years to figure out how to horizontally drill and hydraulically frack to monetize the asset. This is -- this mandate taken 20 years of it's 10 years from now. But we have that same kind of hidden asset value -- like I said, it's a free call option appropriately priced today, but will contribute meaningful value to investors in companies that have local spectrum assets, which streamers don't have networks maybe have some stations....

What would be one of the revenue models or if you imagine because I understand the spectrum definitely has value. I think most investors agree, but Spectrum has been this [ core key of asset ]. If you ask Charlie Ergen as well over the years and investors trying to value it. But what would be the revenue model? Would be like a GPS provider? Would pay an annual contract?

Well, yes, it's already being used, 3.0 is being used in South Korea for precision agriculture, right? You don't need to have a tractor driver to get it to go up and down so we can control that by a terrestrial-based GPS system. Anything that needs to know where it is or you need to know where it whether it is a delivery fleet, a taxi service, an Uber driver. The auto correct of our to satellite-based GPS. We bring it down to a factor of a few inches to a foot rather than a few meters to -- and that we deliver the package to the right house or the wrong house on the street.

Internet backhaul, and we are the wireless connector of the Internet of things, and we do a terrestrial, we can do it point to multipoint, you can just think of -- you're almost -- what we're doing is we're not trying to say, here's the service we're trying to sell is like, here's the toll road, here's an open source development kit, you decide how you want to use it and how much you're willing to pay for it, and we'll decide if we want to do business. But that's coming. We are part of a consortia with Scripps, Sinclair and Gray. It's called EdgeBeam Wireless. TEGNA is not a member of that consortia when we acquire, we'll be able to enter their spectrum into this JV and it's to mine for, it is a business development agent for monetization of ATSC 3.0 spectrum. And so I believe you'll start to see proof of concept and money flowing to that organization and then ultimately to our participating spectrum holding stations in 2026 and really early on in 2026.

And one other thing I would just add there that just differentiates from Charlie's spectrum is we actually already have our infrastructure build out. We have towers everywhere. We don't have to spend a bunch of money to go and build out that infrastructure. It's in existence today.

One last question I want to get to because we've talked about a lot, but one of the benefits of your company has been strong free cash flow generation, great capital allocation. So what are -- what is your philosophy around capital allocation, buybacks? What is the pro forma leverage going to look like and that kind of...

Yes. Look, we have always said we've been -- while we were sort of stimming from doing any acquisitions, we were utilizing our excess free cash flow to buy back our own company, so buy back our own stock. Now that we will have a deal to do, we're going to redeploy that excess free cash flow to pay down debt and to deleverage the business as quickly as we can. That's really about our MO, right? As we do -- borrow some capital and then use that excess cash flow to kind of delever back to where we were on a go-forward basis. So I think at the time we close, we should be around 4x leverage, and we should be able to kind of be back to where we are depending on interest rates, but sometime in 2028.

So experts at M&A on the cost of a catalytic transformational deal, deregulation trade, free cash flow powerhouse, organic innovation with this NewsNation network that feel people under-appreciate, hidden value in the spectrum. What's not to like?

It's a living.

Absolutely.

Thank you, Brian.

Thank you very much again for doing this. Really appreciate it.

Appreciate it.

[Audio Gap] including Perry Sook, CEO; and Lee Ann Gliha, CFO. Thank you both for coming.

Thank you for having us today.

No, that's great. I'm super excited about this conversation just because it seems a little bit different, given how much interesting stuff is going on at your firm right now, given the pending transaction. So I would just like to start with a high-level question.

If I step back and look at the last, I don't know, 5 years, 6 years, all of the big media companies went out and did acquisitions. They focused on national assets, didn't really buy any more TV stations so far. You guys took a different tact. You focused on your local assets. So talk about that, what is it that you see that the rest of the media ecosystem doesn't see? Like what undergirds your strategy?

We built the company from the bottom up with television station acquisitions, the outgrowth of our ownership in the CW, and the creation of NewsNation have all been because of the foundation of the local stations. It is the -- as I said, on an investor call earlier in the quarter, it is the least sexy but most sticky part of the ecosystem. We have 1,800 sellers that have relationships with over 40,000 different SMBs across the country.

And we have personal relationships with both the viewers and the advertisers. We're a branded entity delivering programming into their home, delivering news and information, delivering other network programming into their home, but it's -- nobody goes home to watch a Nexstar station. They're going to watch [ News Aid ] in Tampa or [ WJET-TV ] in Erie, Pennsylvania.

So we think those relationships are durable, they're sticky. And it's that last-mile connectivity. Networks can't deliver -- other networks can't deliver their programming into the home, except through our signal now maybe with the streaming product. But we believe that, again, being the company specializing in building local assets, that's the part of the business that will be the most durable.

It's really hard to build a competitive product to that. When you think of the money we spent on property, plant, equipment, people to build a staff and try and replicate what we do, [ Patch ] tried it, right, it was kind of a miserable failure.

And so that existing infrastructure, we think, is a competitive moat and an area we just chose to specialize in that part of the pool and become expert at it and to build our franchise and our fortress at the local level.

And do you think that the relationships you have and the assets you have, do you think it's more differentiated on the advertiser side? Or do you think it's more differentiated on the programming as it manifests itself with retransmission fees? Or both?

I think both. I mean, advertising, we have 40,000 SMBs that we do business with. If you look at national advertising, it's controlled basically by a handful of holding companies that spend concentrated amounts of money across national assets, whether they be digital or national. And the pool isn't that deep, but the dollars are large. And so we think that having a longer tail of relationship with advertisers is more durable and potentially offsets certain categories coming in and out of favor.

We're not immune from advertising being a cyclical business, but we're somewhat insulated, given that a lot of our advertising comes from professional services as opposed to goods that could be subject to tariff or things of that sort.

I think on the distribution level, it's, I think, interesting to note that our product is and always has been available outside of the pay TV ecosystem for free, called broadcast television, we're the original FAST channel.

And so -- but cable operators and satellite operators and virtual MVPDs still pay for our programming because of the ubiquitous reach that it has of the popularity of our local news and the fact that there's nobody else doing local news in any material way in our markets, except for local broadcast TV. We think that is the last bastion and why it's important and special.

What do you think will -- if you had to take a guess at what will happen to local TV station assets over the next few years? There is a -- I think it was Hollywood Reporter article that pointed out that maybe Fox might get bigger, Paramount might get bigger. Do you expect others to sort of follow your path and sort of realize the power of these local assets?

Well, I think there's mulling the idea and actually affecting a transaction, and we have been the biggest buyer of broadcast television stations. Assuming that our transaction to acquire TEGNA is approved, which we do, we will control in excess of 20% of the local television station inventory in the United States and reach 80% of the U.S. population.

It would be hard for any other station owning entity to build a company of that size and scope with any kind of quality assets that have anything other than de novo news operations or things of that sort. So we think there's a, somewhat of a, first mover advantage. There's also who has the balance sheet to be able to do what we have done and been able to do and will continue to do. So I think a lot of those factors go into it.

But it doesn't surprise me that CBS and Fox might express an interest in expanding their distribution of their network assets. But again, that's from the top down. Let's find a way to control more of our network distribution rather than building a fortress of local television stations, which, again, whether we distribute over the air, through a pay service, through a CTV app or digitally; our mission is the same.

We're a local service business that produces local content. That's our product, that's what people want to see. We pass through other product that we rent. But -- and we also help local businesses sell stuff. And I think that will always be a business regardless of the distribution technology, which is why we put so much money into it.

Okay. So remind me the year that you started in this local TV business? What year did you -- what did you own...

Well, my first company, I started in '91. But Nexstar started June 17 of 1996.

1996, okay. So there were two big transactions that you did, right? You did Media General and Tribune. This would be the third big one, at least.

What have been the lessons that you've learned in terms of the power of scale? Because clearly, your North Star is scale. Does that manifest itself in lower operating expenses? Is it negotiating leverage? Is it some advantage that you feel like you get on the advertising side? Where -- what is this? Because clearly, you see a big benefit. But just unpack it a bit.

I would say, all of the above, but I'll let Lee Gliha -- her color on it.

I mean, yes, look, we've seen the benefits over the years. You've seen it in our numbers. You've seen the growth in our revenue really driven by distribution revenue growth. We've seen -- you've seen our ability to rationalize corporate costs, you've seen our ability to implement best practices across our markets and really kind of become a bigger player in an ecosystem that's filled with really large companies.

But I mean, if you look at us, we are the largest local broadcaster today and about $5 billion of revenue. But we are a fraction of the size of the -- a lot of the people that we do business with, a lot of the larger media and telecom companies. And we're a fraction of a fraction of the size of these big tech companies that are out there that are -- that we increasingly compete with.

But we think we bring something to bear that they can't bring it to bear, right? We have this great ability to provide the broadcast and distribution model to these big networks, to the sports organizations that are looking for ubiquitous coverage and the broadest reach that they can have. We also bring really phenomenal local news programming that's incredibly important, that people watch. And if there's a tornado in your city, a flood, any breaking news; you want to be tuning into our stations.

And we feel like the benefit of the scale is really sort of being able to bring all of that together and really provide a better platform for us, a better ability for us to negotiate.

We still believe -- you saw this in our investor deck. We are still underpaid relative to the value that we bring. We estimate based on the Kagan data that we have about -- broadcast, in general, provides about 41% of the viewership for these distributors, and we only are -- in comparison to cable, and we are only getting paid about 29% of the content expenses that the distributors are paying. So there's upside with respect to our ability to continue to monetize that.

And we think, with this TEGNA transaction, this will continue to really grow our reach, solidify our local news organization, really enable us to continue to benefit from those same sort of scale synergies that we've had in the past, continue to implement the cost cuts, continue to be able to drive our revenue figures.

And look, on a pro forma basis, we're going to have a EBITDA that will rival, be in the sort of same ZIP code as Fox and a Paramount, and that's going to hopefully open up a whole new slew of opportunities that we haven't even really started to think about yet. Now with that scale, what can we do to streamline the ability for agencies to buy our advertising, what can we -- what other programming opportunities are there out there?

There's a whole other set of opportunities and possibilities in addition to what we've been able to accomplish and see the benefit of the scale historically with sort of the three areas of corporate operating expense and [ retrans ] synergies.

And I would say, distribution is totally about scale. And we come to the market with a scaled offering of channels and content that people actually want. And so it is evident, even in discussions that have taken place since the transaction announcement, that the increased scale gives us increasing leverage for either parity in negotiations or it makes the nuclear option just that much more untenable for distributors, networks and other things.

And so it's a symbiotic relationship. We all need each other. And I think the bigger we are, the more of those conversations are constructive, and we can think about other things that we can do on a going-forward basis with one another, rather than fighting against...

You used the word parity when you gave that answer. You mean parity and scale relative to the pay TV firms or the networks...

In the traditional ecosystem, as Lee Ann mentioned, with a company that has EBITDA the size of Fox or Skydance, Paramount and distribution at the owned and operated level, that is a multiple of what they produce for themselves. Those discussions themselves, I think, will become a lot more level, whether it relates to virtual MVPDs or other things over time.

Where we are still a [ fly ] spec is in relationship to big tech and those counterparties that we -- and their media pieces that we interface with, we still have problems getting the attention of big tech for certain discussions we want to have.

And again, they care much more about engagement than accuracy, and that's why they're not good stewards of local information and why we think there is a unique and vested interest in maintaining a free and independent press at the local level, primarily provided by local broadcast.

Understood. So as you pursued scale, I assume there were a number of TV station assets that you could have considered other than TEGNA. Can you just spend a second and talk about what was it that put TEGNA at the top of your list? What was it that was unique about that collection of assets?

I mean we looked at everything. We looked at the general landscape. And I think the things that were very attractive about the TEGNA acquisition were TEGNA's got 51 markets, 35 of them overlap with our markets. So we felt like that was a great opportunity from a synergy perspective and ability to really enhance our local presence from that perspective.

They also have a significant concentration in sort of larger-sized markets. And so the larger-sized markets are -- there's more opportunity in those markets. There's a lot of work that goes into running a running a business, so just as much work at a smaller-size DMAs as there is in a larger size DMA.

So it's just a more efficient process to have larger markets in general. So that was very attractive to us. And I think the scale of the business, I mean, it was the large-scale business that we were able to kind of piece it together.

So all of those things kind of came together. It really made a lot of sense when you looked at the overall landscape of what was out there.

I think the other piece of it is it's also -- you kind of have to -- as I always say, you can have an ideal list of things that you want to go for, but there also has to be a willing counterparty. And this was an opportunity where there's a willing counterparty.

That's great. What about integration lessons? Have there been things that you would have done differently as you integrated -- I don't know, whatever, the Tribune, whatever the last one, where you said, "Wow, we could have done that a little bit better," that you think we'll go smoothly? Or do you feel like, "No, we execute -- we set out a plan, we executed against that plan," it's the same plan every time, and this is more cookie-cutter than we might imagine?

I think the way I would think about that is the company has done literally 40 acquisitions in the almost 30 years we've been in business. Are we better at it on now than we were 30 years ago? Had we learned along the way? I think we have. I think what we have developed, though, to your point, is a pretty well-defined playbook of how to do this, how to manage the interim period where you're waiting for regulatory approval.

I had a 4-hour meeting with folks yesterday on that. And just it's the communications process management, the coming together of stations in markets where historically, we were trying to compete against each other, and now we're supposed to play nice in the same sandbox. How am I going to do that? Help me think about that.

And so it's redefining the market and the opportunity and the opportunities for growth, realizing and maintaining that there will always be room for exceptional performers, right, not so much for marginal performers. And we find that oftentimes, they will call their own number before we get to that stage of the integration.

But it's -- I think people are attracted to our company and what we offer and what we've been able to do, not only within the industry but for the industry and our vision of growth in the future that I think it's an attractive place to be.

And I think that we do have a pretty well-worn -- I mean, Lee Ann has a team that performed a desk review on every one of the individual TEGNA business units. That's Phase 1 of the diligence, enough that we could announce and finance the deal. We now will go deeper. And during the pendency of the regulatory approval, and that's when we'll get down to a line item detail specific, even more specific than we have today, and get into things like real estate.

"Okay, we each own property in Dallas, where are we going to move? What are we going to sell? What are we going to keep?" And we haven't even talked about real estate synergies, or proceeds that we potentially can realize because we're still in discovery of that.

But I think we -- having done it so many times that we don't take any step of it for granted, but I think it is, we have that muscle memory that it has become a real strength of our company that we can actually announce acquisitions, actually close on acquisitions we announce, and successfully integrate and achieve the synergy number or in most cases, exceed the stated synergy number at the time of the acquisition.

Okay. So as you sit here today prior to TEGNA, you're sort of at the cap. The FCC has this process underway, where they're going to change the rules as it relates to the capital. We don't know what the final number is. And you guys have been very clear that you would be willing to execute or announce M&A before the paint was dry on these new FCC rules. And now here we are.

So can you just paint just a road map for investors of how you see this playing out between the interplay between whatever the FCC is going to do, when you think those rules might become final? And then what your response might be for this pro forma entity?

I mean, look, I think the whole purpose of this process is really, we've seen lots of good news coming out of the FCC, lots of support for reviewing the cap. The Commissioner put out the -- refreshing the record on the cap, the comments were due on August 22. So there's a path to that cap being eliminated through that process.

We saw that the Eighth Circuit came out and basically said, "Hey, those rules with respect to not being able to own two of the top four rated stations in a market are really not valid." We saw the FCC come behind that and say, "Yes, we actually agree with that."

So we feel like we're pushing on an open door a bit, and we're really just trying to meet that regulatory moment where it is. And we're -- and this is -- time is of the essence, right? We've got a favorable administration here that is focused on pro deal. We've got the FCC that's pro deregulation, and we think that bringing this deal can help kind of push that door open.

We think we'll have a good outcome with respect to the national ownership cap by the process that's ongoing. It is within the FCC's rights to waive existing rules that they have on the books. So to the extent that we have two of the top four rated stations in a market, they could provide a waiver if they so chose.

And so we think that there is a path to being able to get this through. And time is of the essence here in terms of the changing -- the midterm elections coming up, and let's try to make this transaction happen as quickly as we can.

I spend a lot of time in D.C. talking with regulators and politicians and key functionaries in the administration about the need for deregulation, the need to maintain a free and independent press at the local level, the need to be able to compete with big tech on a level playing field, at least in domestic United States.

And it's -- the change in the administration and the attitude toward competition free markets and deregulation couldn't be more stark. And so, as Lee Ann says, we're meeting this regulatory moment where it is right now. And it's the Trump administration and Brendan Carr, the FCC that are pro deregulation, pro competition; and we think it's a unique moment in time where we are all working together towards a common goal.

And so time is of the essence because as time goes on, we begin to think about the next election and people get distracted. So we think there's a sense of urgency to try and effect meaningful change before the end of next year and the midterm elections have happened. And so that's why we're very focused on this outcome.

And I think that you will see NPRMs coming out of the FCC, perhaps as soon as this month, dealing with, first, the national ownership cap and then subsequently, the local ownership rules. And I think both of those NPRMs should be in the public domain, certainly before the end of the year.

And so I think that, again, as Lee Ann says, we're pushing on this open door, and we're hoping to give folks in the regulatory community both reason, but now motivation to examine these rules. And I can tell you that to a person, there is no one that I had spoken to in D.C. that can justify the current regulations with a straight face.

Yes, these World War II era regulations serve the public interest, and nothing has changed. And the last time the national ownership cap was addressed was in 2004. So no one with a straight face would say, "Well, nothing has changed in media in the last 25 years or 22 years." So I think there is a obvious window that we're going to attempt to step through together.

Understood.

I would just add, this is sort of a quintessential, Perry Sook and Nexstar in terms of, over time, we've tried to evolve the business. Back in the '90s, he was the first to use JSAs and SSAs to improve our operating expenses, he was the first to get real payment for retransmission revenue. And here we are again, I think with another calculated risk here on this transaction.

That makes perfect sense. Can I drill down and talk about synergies for a second? So I think you identified $300 million of synergies under the TEGNA deal within the first 12 months. I think under the last big transaction you did, you sort of upsized the synergies, maybe about 10%. I know everyone's going to wonder if the $300 million is going to move up.

So can you just give a little bit of color about what that what the $165 million -- I think that moved $185 million under the Tribune. Was that sort of conservatism originally? Did you discover some stuff along the way, and it's not a proper read across to say, "Oh, Ann just always...

Yes. Well, look, we put out a number that we think is a valid number. It's based on the 2025 synergy estimate. And it is -- we didn't say it was going to be substantially all. We expect it to be achieved in the first year.