2015/2016 Free Cash Flow Guidance Raised to
Reflect Transaction Accretion
Nexstar Broadcasting Group, Inc. (Nasdaq: NXST) (“Nexstar” or
“the Company”) announced today that it entered into a definitive
agreement to acquire the assets of three CBS- and one
NBC-affiliated television stations serving Charleston/Huntington,
West Virginia (DMA #67), Wheeling, West Virginia/Steubenville, Ohio
(DMA #157), Bluefield/Beckley, West Virginia (DMA #160) and
Clarksburg/Weston, West Virginia (DMA #169) markets for $130.0
million from West Virginia Media Holdings LLC (“WVMH”). The
proposed acquisition is expected to be immediately accretive to
Nexstar’s operating results.
Under the terms of the agreement, Nexstar will enter into a Time
Brokerage Agreement (“TBA”) with WVMH effective upon receipt of
Hart-Scott-Rodino (“HSR”) clearance, whereby it will receive the
stations’ broadcast cash flow and pay an annual fee to WVMH. The
TBA will extend until the broadcast assets and FCC licenses are
transferred, which is expected to occur in late 2016. Nexstar
intends to finance the transaction with cash generated from
operations and borrowings under its senior credit facilities.
City of License
Market Rank
Station
Affiliation
1 Charleston/Huntington, WV 67 WOWK CBS
2 Wheeling, WV/Steubenville, OH 157 WTRF(1)
CBS 3 Bluefield/Beckley, WV 160 WVNS(2)
CBS 4 Clarksburg/Weston, WV 169 WBOY(3)
NBC (1) WTRF’s D2 and D3
channels broadcast MyNetworkTV and ABC programming, respectively
(2) WVNS’ D2 channel broadcasts FOX programming (3) WBOY’s D2
channel broadcasts ABC programming
The planned acquisition of these stations from WVMH further
broadens Nexstar’s local television broadcasting and digital media
platform with stations that are geographically complementary to the
Company’s operating base while presenting significant financial and
operating synergies. According to the 2014 BIA Kelsey Television
Yearbook, three of the four stations being acquired have the #1 or
#2 revenue shares in their respective markets.
Upon closing this and other previously announced transactions,
Nexstar’s portfolio of stations that it owns, operates, programs or
to which it provides sales and other services, will increase to 115
television stations serving 62 markets in 25 states, reaching
approximately 20.5 million television households or 18.1% of all
U.S. television households.
In the 2015/2016 cycle, the acquired stations are expected to
generate approximately $15 million in free cash flow and are
expected to provide free cash flow accretion in the 2015/2016 cycle
of approximately $0.23 per share per year (definitions and
disclosures regarding non-GAAP financial information are included
later in this announcement). The purchase price for the four
stations represents a multiple of approximately 6.3 times the
expected average 2015/2016 broadcast cash flow of the acquired
stations after giving effect to anticipated operating improvements
and synergies identified by Nexstar.
Perry A. Sook, Chairman, President and Chief Executive Officer
of Nexstar Broadcasting Group, Inc., commented, “By adhering to our
disciplined acquisition criteria, we are acquiring these four
stations at an attractive pro-forma multiple of broadcast cash flow
and have identified significant synergies with well-defined paths
to realization. The West Virginia markets, and the eastern Ohio
reach of one of the stations, represent a natural complement to our
existing operations in the mid-Atlantic region of the United
States, with the added benefit of having high levels of political
advertising activity. Reflecting Nexstar’s projected year-one
operating and financial synergies we are acquiring these stations
at an attractive pro-forma multiple of approximately 6.3 times
average 2015/2016 adjusted broadcast cash flow, which is consistent
with other recent Nexstar transactions.
“As a result, pro-forma for the completion of all announced and
completed transactions, we are increasing Nexstar’s projected
2015/2016 free cash flow to approximately $482 million, or average
pro-forma free cash flow of approximately $7.85 per share per year,
in the current two year period. Notably, from a balance sheet
perspective, the transaction does not alter our expectation that
Nexstar will end 2016 with net leverage in the mid/high-3x
range.
“Reflecting this and other pending transactions, Nexstar has
acquired 66 television stations and four digital media businesses
since 2011 for approximately $1.3 billion. Significantly, all of
these transactions are accretive to free cash flow and
strategically diversify our revenue and operating base. We expect
to remain active with our M&A initiatives as our corporate,
broadcast and digital media management teams have built excellent
records of integrating and realizing the forecasted synergies and
efficiencies from our numerous transactions and platform building
strategy. We continue to expect that our platform growth, expanding
distribution and digital media revenue, the return of political
advertising revenue in 2016 and our focus on our balance sheet,
cost of capital and leverage will allow us to extend our record of
enhancing shareholder value on a near- and long-term basis.”
Bray Cary, Chief Executive Officer, West Virginia Media
Holdings, Inc. said, “Nexstar is an industry leader and the sale of
WV Media stations to Nexstar will broaden and strengthen the West
Virginia media network we started 14 years ago. With Nexstar's
WHAG-TV (Hagerstown, MD) station added to the list, the new network
of stations will be able to provide all of our viewers coverage
from West Virginia’s fastest growing area, the Eastern Panhandle.
The additional non-stop news from the eastern Panhandle and
Washington, DC area will truly create the largest and only true
statewide news and marketing network. In addition, Nexstar has
emerged as an innovative leader in the digital space which will
create unique opportunities for our advertisers and marketing
partners. This is a company that knows West Virginia as Mr. Sook
worked at WOWK-TV early in his career and is an alumnus of Ohio
University.”
The TBA with WVMH is subject to HSR approval and is expected to
close in December 2015, with the station license assets subject to
FCC approval and expected to close in late 2016.
Definitions and Disclosures Regarding non-GAAP Financial
Information
Broadcast cash flow is calculated as income from operations,
plus corporate expenses, depreciation, amortization of intangible
assets and broadcast rights (excluding barter), net loss on asset
disposal and non-cash representation contract termination fee,
minus broadcast rights payments.
Adjusted EBITDA is calculated as broadcast cash flow less
corporate expenses.
Free cash flow is calculated as income from operations plus
depreciation, amortization of intangible assets and broadcast
rights (excluding barter), net loss on asset disposal, non-cash
compensation expense and non-cash representation contract
termination fee, less payments for broadcast rights, cash interest
expense, capital expenditures and net operating cash income
taxes.
Broadcast cash flow, Adjusted EBITDA and free cash flow results
are non-GAAP financial measures. Nexstar believes the presentation
of these non-GAAP measures are useful to investors because they are
used by lenders to measure the Company’s ability to service debt;
by industry analysts to determine the market value of stations and
their operating performance; by management to identify the cash
available to service debt, make strategic acquisitions and
investments, maintain capital assets and fund ongoing operations
and working capital needs; and, because they reflect the most
up-to-date operating results of the stations inclusive of pending
acquisitions, TBAs or LMAs. Management believes they also provide
an additional basis from which investors can establish forecasts
and valuations for the Company’s business.
About Nexstar Broadcasting Group, Inc.
Nexstar Broadcasting Group is a leading diversified media
company that leverages localism to bring new services and value to
consumers and advertisers through its traditional media, digital
and mobile media platforms. Nexstar owns, operates, programs or
provides sales and other services to 106 television stations and
related digital multicast signals reaching 57 markets or
approximately 17.3% of all U.S. television households. Nexstar’s
portfolio includes affiliates of NBC, CBS, ABC, FOX, MyNetworkTV,
The CW, Telemundo, Bounce TV, Me-TV, LATV, Estrella, This TV,
Weather Nation Utah, Movies! and News/Weather. Nexstar’s community
portal websites offer additional hyper-local content and verticals
for consumers and advertisers, allowing audiences to choose where,
when and how they access content while creating new revenue
opportunities.
Pro-forma for the completion of all announced transactions
Nexstar will own, operate, program or provide sales and other
services to 115 television stations and related digital multicast
signals reaching 62 markets or approximately 18.1% of all U.S.
television households.
Forward-Looking Statements
This news release includes forward-looking statements. We have
based these forward-looking statements on our current expectations
and projections about future events. Forward-looking statements
include information preceded by, followed by, or that includes the
words "guidance," "believes," "expects," "anticipates," "could," or
similar expressions. For these statements, the Company claims the
protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995.
The forward-looking statements contained in this news release,
concerning, among other things, changes in net revenue, cash flow
and operating expenses, involve risks and uncertainties, and are
subject to change based on various important factors, including the
impact of changes in national and regional economies, our ability
to service and refinance our outstanding debt, successful
integration of acquired television stations (including achievement
of synergies and cost reductions), pricing fluctuations in local
and national advertising, future regulatory actions and conditions
in the television stations' operating areas, competition from
others in the broadcast television markets served by the Company,
volatility in programming costs, the effects of governmental
regulation of broadcasting, industry consolidation, technological
developments and major world news events. Unless required by law,
we undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this news
release might not occur. You should not place undue reliance on
these forward-looking statements, which speak only as of the date
of this release. For more details on factors that could affect
these expectations, please see our filings with the Securities and
Exchange Commission.
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version on businesswire.com: http://www.businesswire.com/news/home/20151117005346/en/
Nexstar Broadcasting Group, Inc.Thomas E. Carter,
972-373-8800Chief Financial OfficerorJCIRJoseph Jaffoni, Jennifer
Neuman212-835-8500nxst@jcir.comorWest Virginia Media HoldingsGeorge
Manahan, 304-546-6174Spokesperson
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