Nexstar signals $6.2B TEGNA acquisition to drive 40%+ accretion, eyes 2026 closing

Earnings Call Insights: Nexstar Media Group (NXST) Q3 2025

Management View

• Perry Sook, Founder, Chairman & CEO, highlighted the milestone agreement to acquire TEGNA in a cash transaction valued at $6.2 billion, stating this will "strengthen Nexstar's position as the nation's leading local media company" and expand its scale with 64 top-performing stations. Sook reported, "on a combined pro forma basis, Nexstar and TEGNA generated over $8 billion in revenue and $2.56 billion of adjusted EBITDA." He also underscored that the transaction is projected to be more than 40% accretive to Nexstar's stand-alone adjusted free cash flow, with approximately $300 million in anticipated synergies and only a modest increase in pro forma net leverage.
• Sook confirmed: "Our expectations for closing the transaction by the second half of 2026 remain unchanged." He announced the extension of his employment agreement as Chairman and CEO through March 31, 2029, reinforcing continuity in leadership.
• Sook described another "solid quarter of net revenue and adjusted EBITDA," attributing performance to "stable distribution and nonpolitical advertising revenue as well as strong expense management." He emphasized the enduring power of broadcast television, citing Nielsen data showing time spent watching broadcast TV increased 20% from August to September.
• Michael Biard, President & COO, stated, "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." He noted nonpolitical advertising was "essentially flat and better than our expectation of a low single-digit decline." Biard also detailed strong CW Sports performance, including an 11% year-over-year increase in NASCAR Xfinity Series viewership for the first 30 races of the season.
• Lee Gliha, Executive VP & CFO, stated, "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."

Outlook

• Sook reaffirmed that "our expectations for closing the transaction by the second half of 2026 remain unchanged."
• Biard confirmed, "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."
• Gliha provided guidance: "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 one 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."

Financial Results

• Biard reported third quarter net revenue of $1.2 billion, with distribution revenue of $709 million and advertising revenue of $476 million. He cited a $145 million year-over-year decrease in political advertising as the main driver of the topline decline.
• Gliha stated, "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."
• Gliha reported, "consolidated 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."
• Adjusted free cash flow for the quarter was $166 million compared to $327 million in last year's third quarter.
• Nexstar returned $56 million to shareholders in dividends, repaid $25 million in mandatory debt repayments, and did not repurchase any shares in Q3.

Q&A

• Daniel Kurnos, The Benchmark Company: Asked about confidence in TEGNA deal timing and distribution revenue anomalies. Sook responded, "the pieces are falling in place... there is genuine enthusiasm in this building for this acquisition for the opportunity it creates to grow our business." Biard clarified the distribution revenue anomaly was "truly a nonrecurring onetime only anomaly that will not linger into the fourth quarter at all."
• Benjamin Soff, Deutsche Bank: Inquired about industry consolidation and political advertising outlook. Sook stated, "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." Sook also projected "substantial political revenue in 2026," with broadcast as the dominant repository.
• Steven Cahall, Wells Fargo: Asked about post-TEGNA priorities and CTV strategy. Sook emphasized focus on "acquisitions and ATSC 3.0" and stated, "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."
• Craig Huber, Huber Research: Asked about $300 million in TEGNA synergies and news programming enhancements. Sook identified "at least 9 markets where we can create additional local news broadcasts." Gliha detailed synergy breakdown as "about 45% from net retrans and the remainder coming from operations."
• Patrick Sholl, Barrington Research: Inquired about ad trends and local market weakness. Gliha replied, "We're not anticipating any sort of particular changes in the category... a little bit of sports betting money because of Missouri which is nice."
• Aaron Watts, Deutsche Bank: Questioned core advertising trends for 2026 and NFL media rights. Sook noted the challenge of core ad growth in a heavy political year but anticipated "more tailwinds than headwinds in 2026 overall." Biard was "optimistic" about NFL negotiations, citing broadcast's audience strength.

Sentiment Analysis

• Analysts focused on deal timing, synergy realization, and sustainability of advertising and revenue trends, with a tone that was neutral to slightly positive, probing for clarity rather than expressing skepticism.
• Management maintained a confident tone in both prepared remarks and Q&A, with Sook stating, "I've never been more confident in our strategy nor more energized about the opportunities ahead." When discussing potential challenges, management used language such as "we continue to believe" and "we have a coalition of the willing."
• Compared to the previous quarter, management's tone was more assertive regarding the TEGNA acquisition and long-term strategy, while analysts remained consistent in their focus on forward-looking risks and opportunities.

Quarter-over-Quarter Comparison

• The current quarter featured the major announcement of a $6.2 billion TEGNA acquisition and explicit synergy targets, compared to a focus on operational performance and regulatory reform in the previous quarter.
• Management reiterated unchanged guidance for CW losses and breakeven timelines. The previous quarter's call discussed a similar outlook for CW profitability and sports-driven ratings growth.
• Distribution revenue softness in Q3 was attributed to a nonrecurring item, while last quarter's distribution revenues were described as essentially flat.
• Management's confidence level increased, particularly with the CEO extending his tenure and with detailed integration plans for TEGNA. Analysts’ questions continued to emphasize M&A, political advertising, and ad market dynamics.

Risks and Concerns

• Management highlighted regulatory approval as a key risk for the TEGNA acquisition, with ongoing compliance work in response to DOJ and state AG inquiries.
• Sook acknowledged, "there's a lot of work ahead of us in complying with the DOJ request," but emphasized strong internal support for the deal.
• Gliha pointed to one-time expenses and ongoing integration diligence as areas of focus.
• Analysts raised concerns about advertising market softness, the sustainability of distribution revenues, and core advertising displacement in a heavy political cycle.

Final Takeaway

Nexstar Media Group’s Q3 2025 call centered on the transformative $6.2 billion TEGNA acquisition, which is expected to be more than 40% accretive to free cash flow and deliver $300 million in synergies, with closing targeted for the second half of 2026. Management reported solid financial results despite political ad softness, highlighted strong ratings and viewership growth in sports and news programming, and reaffirmed strategies for further expansion and operational integration. Leadership stability, disciplined capital allocation, and an assertive outlook on regulatory and industry developments position Nexstar for continued growth as the company advances toward closing the TEGNA transaction and unlocking new shareholder value.

Read the full Earnings Call Transcript