Executive Summary / Key Takeaways

• Nexstar Media Group (NASDAQ:NXST) is strategically expanding its market dominance through significant acquisitions, notably the pending $6.2 billion TEGNA merger, which is projected to be over 40% accretive to standalone adjusted free cash flow and generate approximately $300 million in synergies.
• The company is actively leveraging its ATSC 3.0 technology through the Edge Beam Wireless Consortium, aiming to unlock substantial non-video revenue streams from spectrum monetization, with significant revenue growth anticipated around 2028.
• Despite a challenging advertising market and MVPD subscriber attrition, Nexstar demonstrated stable Q3 2025 distribution revenue and flat nonpolitical advertising, driven by strong expense management and the strategic transformation of The CW Network towards profitability by 2026.
• Nexstar maintains a robust financial position with a net first lien covenant ratio of 1.73x as of September 30, 2025, and a commitment to returning capital to shareholders, while also conserving cash for the TEGNA acquisition.
• The company's outlook is bolstered by anticipated deregulation in broadcast ownership, a strong 2026 political advertising cycle, and ongoing efforts to modernize advertising sales processes to compete more effectively with digital alternatives.

A New Era for Local Media: Nexstar's Strategic Ascent

Nexstar Media Group, Inc. stands as a formidable force in the evolving media landscape, having meticulously built its empire since its founding in 1996. The company's journey has been defined by a clear vision for consolidation and innovation, transforming it into America's largest local television broadcaster. This strategic expansion, spearheaded by Chairman and CEO Perry Sook, began in earnest around 2011 with acquisitions like Media General for $4.6 billion in 2017 and Tribune Media Company for $7.2 billion in 2019. These pivotal moves not only expanded Nexstar's geographic footprint but also diversified its asset base, including a 31.30% stake in the TV Food Network.

At its core, Nexstar's business model revolves around producing and distributing local and national news, sports, and entertainment content across television and digital platforms. The company operates or provides services to 201 full-power television stations and one AM radio station in 116 markets across 40 states and the District of Columbia. These stations are affiliates of major broadcast networks including CBS, FOX, NBC, and ABC, reaching approximately 39% of all U.S. television households. This extensive local presence is a foundational strength, enabling Nexstar to aggregate mass audiences in real-time, a capability that other platforms struggle to replicate.

Technological Edge: ATSC 3.0 and the Edge Beam Consortium

A critical differentiator for Nexstar is its pioneering role in the adoption and monetization of ATSC 3.0, or NextGen TV. Through the Edge Beam Wireless Consortium, a joint venture with The EW Scripps Company (SSP), Gray Media (GTN), and Sinclair (SBGI), Nexstar is at the forefront of delivering wireless data via ATSC 3.0 transmission to businesses nationwide. This consortium stitches together spectrum covering over 97% of the continental U.S. and over seven billion megahertz pops, creating a virtual nationwide footprint. This technology offers tangible benefits beyond traditional broadcasting, including enhanced content delivery, more robust emergency alerts, and new data services.

The strategic intent behind ATSC 3.0 is to unlock significant non-video revenue streams. In 2024, the consortium secured its first paying customer in the digital signage space, demonstrating early proof of concept. Future applications are envisioned in areas such as connected car services, providing video in vehicles and more reliable service updates than current satellite-based systems. Furthermore, ATSC 3.0 holds national security implications, with the potential to develop a Broadcast Positioning System (BPS) as a terrestrial backup to the GPS system, offering a less vulnerable alternative. The National Association of Broadcasters (NAB) has proposed a two-phase transition plan, aiming for full ATSC 3.0 implementation in the top 55 markets by February 2028, with remaining stations transitioning by February 2030. Management anticipates that revenue from these technological advancements will "take a step forward" around 2028, positioning ATSC 3.0 as the "biggest value creation lever" for the company.

Competitive Dynamics in a Fragmented Media Landscape

Nexstar operates in a highly competitive media environment, facing direct competition from other large broadcasting groups such as Sinclair Broadcast Group (SBGI), TEGNA Inc. (TGNA), and Gray Television (GTN), as well as national media conglomerates like Fox Corporation (FOXA). Each competitor brings its own strategic focus, but Nexstar's extensive network affiliations and deep local market presence provide a significant competitive moat.

Compared to Sinclair, which is known for aggressive acquisitions and a focus on conservative content, Nexstar's strategy emphasizes community engagement and diversified revenue streams, particularly through its local service agreements and interactive digital platforms. While Sinclair has faced regulatory scrutiny over market consolidation, Nexstar's approach to local programming and integrated digital experiences offers a qualitative edge in regional advertising and customer loyalty. Nexstar's EBITDA margin of 39.47% (TTM) reflects strong operational efficiency, comparable to or exceeding many peers.

Against TEGNA, which also prioritizes local news and digital transformation, Nexstar's broader scale and national cable presence (NewsNation, The CW) offer a more diversified portfolio. The pending acquisition of TEGNA itself underscores Nexstar's ambition to further consolidate and enhance its market positioning. Gray Television, with its regional market focus, competes in similar segments, but Nexstar's broader affiliations and investment in digital media, including its own inventory and third-party solutions, position it to potentially outperform in digital revenue streams. Fox Corporation, with its national entertainment and news focus, operates on a different scale, but Nexstar's ability to aggregate mass audiences through local broadcast remains a powerful counterpoint to streaming and national content providers.

Indirect competition from streaming services (e.g., Netflix (NFLX), Disney (DIS)+) and social media platforms (e.g., Meta (META)) continues to challenge traditional advertising and viewership. However, Nexstar's management highlights that broadcast television's enduring power, particularly for live sports and news, remains unmatched. For instance, time spent watching broadcast TV increased 20% from August to September 2025, surpassing cable networks. The CW's sports programming has demonstrated its ability to beat college football on CBS in key demographics, showcasing broadcast's unique reach. Nexstar is also actively working to modernize its advertising sales processes to compete more effectively with digital alternatives, recognizing the inefficiency of traditional linear TV ad buying.

Financial Performance and Strategic Execution

Nexstar delivered a solid financial performance in the third quarter of 2025, reflecting its disciplined operational strategy. Net revenue for the quarter was $1.198 billion, a decrease from $1.366 billion in Q3 2024, primarily due to lower political advertising as 2025 is not an election year. For the nine months ended September 30, 2025, net revenue was $3.660 billion, down from $3.920 billion in the prior year period.

Distribution revenue in Q3 2025 was $709 million, down 1.4% year-over-year, primarily impacted by MVPD subscriber attrition and a nonrecurring disputed customer claim. However, this was partially offset by annual rate escalators, growth in vMVPD subscribers, and the addition of CW affiliations. Without the one-time dispute, distribution revenue would have been slightly positive. Advertising revenue decreased by $146 million in Q3 2025, largely due to a $145 million drop in political advertising. Encouragingly, nonpolitical advertising was "essentially flat and better than our expectation of a low single-digit decline," benefiting from national and local digital advertising growth and the absence of political crowd-out.

The company's strategic initiatives to streamline operations yielded results, with direct operating and selling, general, and administrative expenses declining by $23 million, or 3%, in Q3 2025. This disciplined expense management contributed to an adjusted EBITDA of $358 million for the quarter, representing a 29.9% margin. Net income attributable to Nexstar Media Group, Inc. for Q3 2025 was $70 million, down from $187 million in Q3 2024, reflecting the absence of political advertising.

Nexstar's investment in The CW Network continues to show progress towards profitability. In Q3 2025, The CW's losses were reduced by $5 million, or 24%, year-over-year, driven by growth in distribution and advertising revenue. The network achieved its sixth consecutive quarter of primetime ratings growth, with sports programming now constituting over 40% of its total programming hours. NewsNation also demonstrated strong performance, ranking as the #1 basic cable network for year-over-year growth in Q3 2025 and consistently outperforming MSNBC and CNN in head-to-head telecasts.

From a liquidity perspective, Nexstar generated $701 million in net cash from operating activities for the nine months ended September 30, 2025. The company's balance sheet remains robust, with total outstanding debt of $6.359 billion as of September 30, 2025, and a net first lien covenant ratio of 1.73x, well below its 4.25x covenant. Nexstar and Mission had $586 million and $14 million, respectively, in unused revolving loan commitments. The company is strategically conserving cash, which would otherwise be used for share repurchases, to fund the more accretive TEGNA acquisition.

Outlook and Strategic Initiatives

The future for Nexstar is shaped by several key strategic initiatives and a favorable market outlook. The proposed acquisition of TEGNA Inc. (TGNA) for an estimated $6.2 billion is a cornerstone of this strategy. This transaction, expected to close by the second half of 2026, is projected to be "more than 40% accretive to Nexstar's stand-alone adjusted free cash flow" and yield "roughly $300 million in anticipated synergies." These synergies are expected from net retransmission, corporate overhead, operational efficiencies, and the ability to operate multiple stations from a single infrastructure in overlap markets.

Management's guidance for Q4 2025 anticipates nonpolitical advertising to decline in the "very low single-digit area" year-over-year, while political advertising is expected to align with 2021 levels. Looking ahead to 2026, a significant election year, Nexstar projects "substantial political revenue," with broadcast remaining the dominant repository for political advertising, though CTV advertising is expected to be the fastest-growing segment. The CW Network is firmly on track to reduce its 2025 losses by approximately 25% compared to 2024, with profitability targeted for sometime in 2026.

Nexstar is also poised to benefit from the renegotiation of approximately 60% of its subscriber base for distribution agreements later in 2025, with positive impacts on distribution revenue expected to commence in Q1 2026. Capital expenditures for Q4 2025 are projected at $32 million, with interest expense around $88 million and cash taxes at $45 million. The company's commitment to ATSC 3.0 and the Edge Beam Consortium represents a long-term growth driver, with revenue from spectrum monetization expected to accelerate around 2028.

Risks and Challenges

Despite a compelling growth narrative, Nexstar faces several risks. The TEGNA merger, while strategically significant, is subject to regulatory approvals, including from the DOJ and FCC, and could face delays or termination. Nexstar has already received a second request letter from the DOJ and inquiries from state AG offices, and a termination fee of $125 million would be payable to TEGNA if regulatory clearances are not obtained by November 18, 2026. The integration of TEGNA also presents operational complexities, with potential for "material unanticipated problems, expenses, liabilities, loss of customers and diversion of the attention of our management and employees."

Economic conditions, including sustained inflation and high interest rates, could adversely affect operating results and cash flows. While Nexstar's revenue base is diversified, approximately 15% of its total revenue is tied to goods-based businesses that could be impacted by tariffs. The company is also involved in ongoing litigation, including the Local TV Advertising Antitrust Litigation and tax disputes with the IRS, which could result in material liabilities. Furthermore, the FCC has issued a Notice of Apparent Liability for Forfeiture to Nexstar and Mission for alleged violations related to WPIX, which Nexstar is "vigorously disputing."

Conclusion

Nexstar Media Group is executing a bold and transformative strategy, solidifying its position as a dominant force in the U.S. media landscape. The pending acquisition of TEGNA (TGNA), coupled with the strategic revitalization of The CW Network and the pioneering development of ATSC 3.0, underscores a clear path to enhanced shareholder value. The company's disciplined financial management, robust cash flow generation, and commitment to deleveraging provide a strong foundation for future growth and M&A opportunities, particularly as regulatory reforms are anticipated.

While challenges such as economic headwinds, regulatory hurdles, and ongoing litigation persist, Nexstar's leadership, proven track record of accretive acquisitions, and technological foresight position it to capitalize on evolving industry dynamics. The focus on local journalism, live sports, and innovative spectrum monetization through ATSC 3.0 represents a compelling investment thesis, promising sustained growth and a resilient business model in the years to come.