Nexstar Media Group, Inc. (NXST) Earnings Call Transcript & Summary

Welcome, everyone, and it is our pleasure here to be at Bank of America, wrapping up our conference here for the week and to welcome Nexstar. And from Nexstar, we have Perry Sook, the Founder, Chairman and CEO. We have Lee Ann Gliha, Executive Vice President and CFO. And my name is Brian Fenske, Managing Director, TMT specialist, to help moderate this fireside chat, and I'd love to get started.

And maybe start with typical kind of high-level question to frame the Nexstar story and familiarize some of the investors here, but pay-TV business broadly top of mind for a lot of investors, especially at this conference. You've been very clear about your view regarding the continued importance of broadcast in the television ecosystem, where broadcasting sits. Could you just elaborate a little bit on your viewpoint of Nexstar's place in the world, broadcast television's place in the world, and maybe some common misperceptions that we all have about the businesses. I've heard you speak in the past, but I think we'd all benefit from hearing again.

Sure. I think it's important to not lump linear television into one bucket. And increasingly, I think you have to differentiate between broadcast stations, maybe broadcast networks, and cable networks. Broadcast stations are kind of the foundational element of every skinny bundle, the skinniest bundle. It's called the broadcast basic tier that all cable started with when it was a community antenna reception device. And there's rarely any dispute about the worth of that in the bundle. Broadcast stations collectively in the pay-TV universe generate cumulatively about 40% of the viewing and currently receive about 25% of the economics back. So as this business was being built out, a lot of the money was allocated based on vertical integration, right, if the company owned a cable system as well as cable channels. And so that's what I think the unwind that's kind of going on now. People realize that maybe this should be more rationally distributed by the time spent viewing. Or the most popular channels should get the bulk of the money and the long-tail channels that are roughly irrelevant maybe should be either on a tier or out of the bundle entirely. And so I think you'll see that continue to play out. So we definitely like our place in that conversation. And because there's no disputing that our 5 broadcast network stations and affiliates, owned and operated, are the most watched content in the bundle. And so we see that continuing to play out. We think, again, if you look at -- we built the company kind of from the local and the bottom up. The vast majority of our revenue and EBITDA is derived from the 200 broadcast television stations that serve approximately 70% of the U.S. That is without peer in the broadcast industry in terms of our ability to do local activation at scale in 70% of the country. The next largest group reaches less than 40% of the country. So we're 50% or more larger than our next nearest competitor. And so what we've begun to explore now is kind of marrying our national assets, our national cable and our national broadcast assets with local, particularly like take NASCAR as an example, right? We'll put the races, the Xfinity races on the CW, but then when the race comes to a market near you, we can do local activation, live news hits and things of that sort, integrate sponsors into experiential on-track, in the infield type experiences that the public can participate in. So we're just -- I spent -- the company has been in the business 28.5 years, I spent 27 of it putting all of the pieces together. And now we're looking at maximizing the value potential of every piece.

Well, why don't I jump, because as we talk about putting in pieces together, I'll sort of jump to one of my later questions regarding M&A and just kind of the world right now of pay-TV. Obviously, some major media companies are going through current potential transformations. There could be an acquisition, there could linear cable networks that are for sale or sought to be spun or something like that. Where do you guys stand? Is Nexstar complete? Are you kind of strategically complete and really love the hand you have? Are there interesting assets? And what would be your sort of evaluation framework where one of these, I'm thinking, linear cable networks, but could there be other stations? And I know there's regulatory limitations on certain...

Well, I think that's the governing factor, right? We are at the national broadcast cap in terms of what we can own in markets we're not already in. So the rules would have to change before we can expand our portfolio horizontally to cover more of the United States. We have done and we'll continue to do, buy stations in markets we're already in, under circumstances that comply with the current rules, because there are restrictions there, too. So we just bought an independent station in San Diego, which will become a CW affiliate when the current CW affiliation agreement in that market is done. And so we'll have a Fox-CW combo, which is pretty effective. And we'll do some more of that. Those are more tack-ons and add-ons then. I think scale M&A in this environment is very hard due to the regulatory hurdles that are up, not only for our business, but for the airline business, for the supermarket business, right? Anti-consolidation seems to be the rule of the day in Washington, and until or unless that changes, we'd be hard-pressed to spend time and money on scale M&A if we felt the only way to get the deal to the finish line was with a changed administration. I would never bet the company on a single successful outcome.

And you talked about CW and I'd love to, because you acquired the CW in 2022. Are there assets similar to that, that would be interesting? Because I understand the broadcast network/station regulatory hurdle. Is there a limitation on buying a classic cable network?

I would say our appetite for cable networks is pretty diminished. I mean, we have one NewsNation, which we converted the old WGN America into a news network from a general cable network. I wish I could claim we were smart enough to know that, that was the exact pivot to make when we did, but it's worked out pretty well. But there are very few cable networks that we would covet because they're captive to the ecosystem. But I think in terms of broadcast networks, under the current rules, we could own, as a company, a big-four broadcast network because the CW is not covered under the big-four network rules. So in theory, you could, a, I always tell people it would have to be an actionable transaction and highly accretive, more accretive than buying back our own stock, which is an embedded 20% return that Lee Ann does every day. And so if the profile existed at a risk-adjusted return and it was an actionable transaction, I think we would certainly lean into it. But in this regulatory environment, it would be very tough to get done.

Great. So just switching gears a little bit, but the direct-to-consumer ecosystem has obviously been evolving quickly over the last few years, the launch of Disney+, the changing mood in the market, chasing subs at all costs to focus on profit. The last year, we've seen a lot of those services raise prices. We've seen subs stall out in many cases. So what does that mean to the value of your viewership, the value of subscription, if you will, the distribution revenues? What kind of angles are you thinking about this might create for your business? And it could just be highlighting that you're undervalued or underpaid. But what needs to happen on the pay-TV side to kind of match some of those changes on DTC?

Yes. I mean, look, I would say these changes really kind of mirror or are a manifestation of what we've been talking about for some time, right? When these direct-to-consumer services were launched, they were all incredibly negative in terms of the profitability of the businesses. And so I think what's happened now is the media companies that owned these direct-to-consumer businesses have realized, oh, okay, you know what, I'm not going to get to the subscriber numbers I need to get to, to make these things profitable on their own, I got to actually kind of start to increase the prices of these businesses. And what that's doing is it's making this portfolio of the direct-to-consumer products more expensive than the pay-TV bundle. And so from our perspective, this a good thing, right, because this is basically everyone is coming to the recognition that we need to kind of price things fairly. There needs to be -- what's priced on the pay-TV side needs to be priced the same on the direct-to-consumer side. And over time, what we think this should do is it really should help highlight the value of the bundle in the pay-TV ecosystem and really hopefully reduce the rate of attrition that's in pay-TV and really help us with respect to our revenue streams because we've got a more stable subscriber base.

Is one of the complications -- because I'm just thinking about what's going on with some of the cable broadband companies. They're having -- they had a pretty rough year, Charter and others. Is it creative complexity in that? You need to collect from the consumer, if you will, a fair number and the cable company needs to collect that. Charter is under pressure at its broadband business that it may be more loathed to raise prices on the consumer, pass along these. So I'm just wondering if it creates an incremental tension in you trying to get paid those higher affiliate fees when the collector is under pressure in its own business.

Well, yes, of course, it does create a tension. But I think the Charters of the world and the DirecTVs of the world are trying to address that by going directly at where the fat is in the bundle, right? They're saying, "Let me get rid of these derivative cable networks that Disney has, let me sort of try to reduce my overall content cost and my negotiations that I've had with all of these other content providers for the content that's not as premium," right? There is no more premium content than the content we have. And we actually have, from a Nexstar perspective, a pretty pristine offering. When we go and talk to the distributors, it's the most watched content that's there. And we don't have a lot of fat that's in that discussion. And so I think that we're positioned well, and I think the distributor now is trying to figure out, okay, how can I reduce my overall cost to kind of get back to a place where I'm providing the consumer with something that they want and they're watching, and I'm not overpaying for stuff that they're not watching, so that I can then have more profit for myself be able to accommodate the content companies that are actually providing the most watched content.

That's great. And that brings me to the next point, which is on one of the most premier forms of content you guys air, which is sports. And sports are a huge part of the overall media ecosystem. There's been lots of rights deals, the NBA renewal, and the WNBA, massive success, and college women's basketball, a massive success. So I assume you're very bullish on the value of sports overall and what it means to you as a company. How is this -- can you just like articulate a little bit to the audience here the value, the reach you provide to the leagues? And I think it was Roger Goodell who made the comment. You might have quoted it on an earnings call, I heard, about the value of the reach that networks provide that sometimes the streaming services can't. And I think right before I came over here, there's talks about Amazon and talks to sign a deal with Bally Sports, so to basically pick up the rights to some of these regional sports networks. So can you talk a little bit about the value to your company of sports, the opportunity in a few years, and maybe how we weave in the streaming players?

Sure. I'll start and Lee Ann can add additional color. But I think our object lesson was with NASCAR and our negotiations with them over the year that it took to make the deal. They were willing to forgo incrementally higher revenue from a streamer, because they said our Xfinity Series, which is the Saturday races, were primarily a cable product, and they saw the value of broadcast distribution. And so we were able to make a deal, because we were able to deliver a network that is fully distributed in 100% of all U.S. homes, whether it's over the air or through a pay-TV service, you can get the network. And so that's extremely valuable to them. And I can tell you, I was just down at the Xfinity race at Daytona, Friday night, 2 weeks ago, and I had [indiscernible] come up to see me and say, "We were going to get out of Xfinity because we thought it had limited potential until you guys showed up." And so I think you see that play out. You see the movement of games from a cable network to a broadcast network with the NBA, and we've had conversations with Adam Silver personally, and they saw the value of broadcast, the expanded reach, not only outside the pay-TV universe, but the ubiquity of it all, and the fact that the deal we did with Steve Ballmer and the Clippers in Los Angeles with KTLA, the players can come on our morning show and talk about their hobbies and what they do in their off time. They can do the weather forecast. They can go to a charitable event that we're hosting or whatever, or we could go to one that the team is hosting and he said, "That makes my players more relatable as human beings and makes it a more sticky relationship with the fans." And so I think we are uniquely positioned to be able to do that. We have deals that we'll do at the local level on our stations where we have the inventory to accommodate. We'll do some more of those in the local markets. And again, on the CW, I think our pivot has been pretty remarkable. We always had sports in our mind's eye, but I didn't know we would spend $1 billion on rights fees in the first 18 months of our existence. But we were able to bring NASCAR, bring WWE NXT, bring ACC football, basketball and women's basketball the Pac-12 or 2-Pac, as we call it, with the 2 schools that are left. And so now we've increased the amount of programming that the network offers by over 40% total hours of network programming, and we went from 100% entertainment programming to now 46% sports, 54% entertainment. And I can imagine over the next 3 years that those numbers will flip, that will be majority sports versus entertainment. And again, live sports, it's what people watch and they watch it live. You can DVR it if you're not going to be home to see the start of the game, but you'll likely know the outcome if you wait until the next day to watch it. And advertisers are into it not only because of the association with the sport. It's a lean forward experience, I'm alert, paying attention to what's going on as well as the ads. But then the things we can do with our local assets to tie a bow around it and do local activation for that particular network sponsor at a local level in the markets, where they do business and we do business.

You were referencing CW specifically when you said this shifting to close to 70% sports at some point.

Right. Yes, I don't know if we said 70%, but I mean I think it would be more...

But it's kind of 50-50 now-ish.

But that's happened in less than 2 years.

Yes, it's incredible.

And again, we were -- when we put LIV Golf on the air, it let everybody know we were open for business. And as much as people may not necessarily acknowledge or think about it, broadcast television is still beachfront property for people, network television is beachfront property. Everyone would prefer to have their games on a broadcast network than on a streamer or a cable channel. And I think the economics play into it, but I think people are realizing that there may be more -- they might be willing to sacrifice some increment of economics for additional distribution.

And the more aggressive on the surface moves by Amazon and some others, but I'm just -- let's focus on Amazon, into sports rights. Does it have any -- what's your read on how that impacts the ecosystem over the next few years, other than it's another venue, they obviously are going for more premier games.

Yes. I mean, look, I think it's still on the margin, right? If you just look at the overall ecosystem and where the preponderance of sports is and the preponderance of the sports that's the most watched sports, it's all still on broadcast television. So I think that there will be some continuation of -- this streamer is getting some additional sports rights, primarily because the leagues want to improve their overall economics and their profitability, but it's not going to take away from the bread and butter of the broadcast model. I think one of the things that Perry alluded to, I mean, if you're a team or a league, you don't -- you care about the media rights in the dollars, but you also care about other things, right? You care about are there people coming to the games? Or is there a fandom? Is there a franchise value that is kind of growing? Are you getting tax incentives to help build your stake in local markets? So if you start to take that content and take it away from broadcast, which, by the way, there's 13% of the population that's consuming that over the air, what kind of negative impact are you going to have on your overall franchise longer term?

Switching gears a little. But can you provide an update on ATSC 3.0, this technology, and maybe even -- because I always view there might be people tuning in who are not as familiar with your story, just a little bit of 1 or 2-liner on the technology. What's the latest thinking on timing, impact for your company and broadly.

I think our industry, the local broadcast station industry, has the ability to make a similar pivot to what cable did, which distributed legacy video through those pipes and are now distributing data through those same pipes. We have the ability to do the same thing. We still have video on the air, our television product. But ATSC 3.0, next-gen TV is an IP-based transmission schema, which is in sync with all the other devices you have in your hand or your home, but it's also in sync with the rest of the world that's adopting this technology. So it's a more efficient use of the spectrum. So I still have the same 6 megahertz to play with, but I can do more things, because it's a more efficient transmission schema. So we're focused on, first and foremost, the business applications and think that the follow-on of that will be the consumer applications, which is a better picture, higher-quality audio, but we have to retrofit everything we do, like we did when we transitioned from analog to digital. And that took 20 years. This won't take 20 years, but it will still take time. But just freeing up spectrum to be able to do location-based GPS-type services to provide a backup GPS system for the country that -- we're the only industrial country in the world that doesn't have a backup GPS, which is not just for your nav system, but it makes the credit card machines work at the gas pump. That's how your time stamp gets on is from GPS, the same with the ATM machine, medical equipment. And so most countries have a backup satellite system to their satellite system. So if somebody decided to set off a dirty bomb in space, both would be rendered useless, but we have the ability with our spectrum. One of the services we can provide is a backup GPS system that's terrestrial-based to the country. And 2 agencies, the DOD and the DOT, have said that's in the national interest. So that may spur adoption and conversion and all the things that would need to happen to make this viable. But we think there's an opportunity for the connected car, not only navigation, but we've had at least 2 OEMs express interest in creating a discrete channel of entertainment for the TVs in the headrests in their premium models that would be branded entertainment in their vehicles. We just did a drive test with that particular OEM in San Diego, going up and down all the hills of the market. And it's like the old cellphone commercial, "can you hear me now", and it was basically to prove that the signal would hold on various levels of terrain. So there's a lot of proof of concept going on right now. And I think that you'll see signed contracts for limited usage and tests coming in the not-too-distant future. And I think, again, we say that this spectrum is kind of valued on a per pop basis. And retrans is kind of valued on a per home basis, per subscriber basis, and those are not totally dissimilar. But the upside is, we see, in 10 years, the ability to make as much money from ancillary uses of our spectrum as we do from distribution revenue today, and that would be for our industry, $15 billion, and for our company, something in the $2.5 billion range. So if that's all net to equity, you can imagine how exciting that could be for those of us that own the stock.

Yes, absolutely. And now is ATSC -- I'm just thinking we had Trade Desk here yesterday, and obviously, their specialty is programmatic advertising, and connected TV advertising is a big opportunity for them. ATSC 3.0, is that an unlock to help broadcast stations and somewhat "traditional providers" get towards more programmatic advertising? Or are we there already?

I think we're there in terms of programmatic. We could, with ATSC technology, geo fence and geo target. That's not really what broadcast does best. We're the big reach mechanism, but there is some of that, that could be done that can't be done today. I don't think that will end up being the highest and best use, but it is a possibility.

Great. Now just turning quickly to the advertising market. And if you could frame how much of revenue recently comes from advertising versus distribution? I think distribution is more than 55% or something.

That's about right, yes.

Yes. So advertising for your company and many has become a smaller percentage, but still significant. What's the ad market like right now on the national and local side? What's the mood? And then we can get into talking a little bit about the impact of political. We're obviously heading into a political cycle, an important one. So would love to hear about how that is expected to shape up and impact your business.

Yes. I mean I would say just to kind of frame everything from a nonpolitical advertising side of things, we generate somewhere -- 68% to 70% of our revenue on the advertising side comes from the local market and the local market tends to be much more stable than the national market, because local market is more call to action versus the national market, which is more branding. And so I would say, we've been seeing a sequential improvement in the rate of decline for the last few quarters in terms of the rate of decline on the advertising side. National has been obviously much more negative than the local side of things has been, but it has been sort of sequentially improving. It's still not a great overall advertising market in general. But I think we've also been impacted positively here with -- the third quarter with Olympics has been kind of a boon to overall advertising. And then on the political side, do you want to...

Well, we're right in the thick of it, right? Fundraising has set all records. Our forward bookings are substantially ahead of where they've been at any point in '22 or '20, and we're on record saying it will be a record political year, exceeding 2020 and 2022 in terms of the total quantum of dollars not only spent in television, but we tend to get a low to mid-teens percentage of every dollar spent in television given our geography and our reach. So we're not changing our guidance, but if you're a betting person, I'd suggest you bet the over.

And you've talked about, and people who follow this industry know the notion and the concept of crowding out of other dollars. Can you briefly explain that, because I think people just see there's an avalanche of political dollars coming. That seems bullish. That seems positive. But just the mechanics of how does political spending crowd out? It's on the rate or CPM level? Or how does that work?

Well, we're like an airline, we can't add seats to the plane, right? We can't go up a page like newspaper or play one less record. I mean, a lot of our break structure is fixed because of the content that's around it. So it's a finite amount of inventory with people that are willing to pay whatever it takes to be that first spot in the first break of the football game on the Sunday before the election. But we have a price for that, right? But regular way advertisers are probably not willing to pay that, because they don't have that same requirement. So you're working with a finite amount of inventory, and there are people that -- it can be 10x to 20x the unit rate that they're used to paying in a non-battleground state and a nonpolitical year. And so you never know their intentions of what they would or could have done. But we do see people planning around September and October and the first week of November to allow the political process to play out, and then they'll place their fourth quarter advertising in the back half of the fourth quarter. So I mean, that's pretty much the theory of it all.

All right. Great. NewsNation has been a success, has continued to become more prevalent in mainstream. How is it performing? Can you just give us an update on NewsNation?

Well we turned 4 years old on Saturday and have, I think from a standing start, built out a 24/7 cable network that I'm proud of everything we put on the air. It was built to reach the center of opinion, to offer balanced coverage, to not speak to the fringes on the left or the right. We're not going to be anybody who's echo chamber. And news is clearly labeled as such, opinion is clearly labeled as such, and we're going to get both sides of the story, and we continue to get very high marks from NewsGuard and Ad Fontes and all these monitoring organizations in terms of high in original programming, original reporting, and high on unbiased content. And so we wear that as a badge of honor. It's a hard thing to police and it's a hard thing to drum into everybody every day that this is our mission. But we think it's the biggest swim lane in the country. It's not the 20% far left or 20% far right, it's the 60% in the middle that we can agree on a whole lot more than we disagree on. And so that was the thesis, plus the fact that we have the largest newsgathering organization collectively in the United States of any company in the world. And that those 5,500 journalists that are spread across 40 states could augment the coverage of the network and provide resources that other folks simply wouldn't have. So it has been profitable from day 1, given that we had embedded distribution revenue in WGN America that we've substantially improved on. The advertising is sold at a higher cost per thousand in news than it is in entertainment programming. And so we've been the beneficiary of that. And now it's all about growing awareness. When we launched, we were known in 11% of U.S. households. And 4 years later, it's now 36% of U.S. households. But that says that, in 2/3 of the country, we have to knock on people's front door and introduce ourselves. So the big push now for me is awareness, continuing with our original content and giving people a reason to come to us when it would be easy for them to go where they've always gone, or some of viewers we were trying to reach have abandoned cable news because it was so toxic and polarizing. So we're building the wall one brick at a time. And I'm always pleased, but never satisfied, with the amount of growth that we have and are showing. But we have consistently grown the total audience for the program. And we have, I think, quality people on the air. Elizabeth Vargas and Leland Vittert and Chris Cuomo and Ashleigh Banfield and Dan Abrams are the folks that host our shows in the evening that have marquee value to them. We wouldn't have gotten the Republican debate had Elizabeth Vargas not been on payroll. And again, I'm proud of the content they put out every day. And we're not afraid to have a little controversy and we're not afraid to allow both sides in the same room. The only rule is no yelling and screaming and we're not going to call anybody names.

Right. And are you leveraging your station network, local news facilities, talent, programming and NewsNation? Like is there some cross-pollination where you're able to get synergies from using local content...

Absolutely. I mean, we have built a facility in Washington, D.C. at 400 North Capitol, which is steps off of the Hill. It's where NBC and Fox are as well that a senator can come in and do a national interview for NewsNation or the Hill, can go sit with a correspondent for the Hill that writes on defense or energy or agriculture, whatever, and that may be the subcommittee that he or she chairs, and then can go sit in a FlashCam studio that's just down the hall and do an interview for the folks back home in Sioux Falls, South Dakota. And you can accomplish all of that in an hour, and we can deliver that to 70% of the U.S. Well, nobody else has that capability. And we just finished the construction, and we need to expose this to members of Congress, because I think it's a unique value proposition for use of their time, but it also allows you to hit national inside Washington and hyperlocal in a one-stop shop. And so I think that's where you'll see the synergies really manifest themselves as more and more people are exposed to what we have built there.

That's great. Now I wanted to talk a little bit about the financial model. You guys have had an attractive profile, both high margins, free cash flow generation, return of capital. But in tech, there's been a big rah-rah movement of cost discipline over the last 2 years in bigger companies, Google and Meta. But you guys have always run your company as pretty lean. So can you just talk a little bit about the philosophy of OpEx and just running the stations in a profitable way, keeping an eye on margins. And then we could talk a little bit about the real -- the payoff, the free cash flow generation, the buybacks and the great story here.

Yes, well as our prior CFO, Tom Carter, used to say, "We throw nickels around like manhole covers," right? That's the sort of the philosophy around Nexstar way, which is let's treat it like it's your own company, right, and make reasonable decisions. And any investment that we make, we make sure there's a good ROI on it. And there's always been a cost-conscious focus. And really, that's our ethos, right? We care about how can we maximize the free cash flow, the cash to the bottom line? And if that means doing different things in a different way or sharing services across the company, we will be doing that. And that's really been part of our business model since day 1.

This great net result is this free cash flow generation. And how do you think about capital allocation in the context of dividends, buybacks, M&A opportunities that kind of...

Yes. I mean, look, I think historically, the company has a significant return based on M&A -- debt-financed M&A. That's become less a part of our story. Sort of not since 2019 have we done a major M&A deal, because we're at the cap, as Perry mentioned earlier. So there's less of that to do these days. So that means that we need to figure out ways to generate great returns for our shareholders with that excess cash flow. And so we've been doing that in a variety of ways. We have a dividend now that's north of a 4% yield, that's a claim of a little over $200 million on our cash. We have some mandatory amortization that has to get paid every year on our debt, and that leaves a significant amount of free cash flow left to make the decision on what to do. Because our stock trades at like a 20% free cash flow yield, it's very, very accretive on a free cash flow per share basis to be buying back our stock on a regular basis. And I'm a purist, I look at that in terms of our core valuation, our DCF analysis, and believe that that's where we're going to put the lion's share of our capital to work. Now on the flip side of that, we have a lot of shareholders that value our stock based on an EBITDA multiple. And when you look at our debt to cap, it's actually just about as accretive to pay down debt as it is to buy back stock. So what you're going to see us do this year, when it's a political year, and we have excess cash flow, is we're going to pay down a little bit more debt than what we've done in the prior year, just to use some of that cash flow, and it will be beneficial to our stock as well for those folks that are valuing us on an EBITDA basis.

And remind me, what is your net leverage ratio right now? And have you articulated a target that...

Yes, we don't really necessarily have a target. We feel like our leverage -- our quantum of leverage is okay, in the right area. You will be kind of in the -- probably just in the high-2s on a net basis on a covenant basis, that's including the CW losses by the end of the year, but that's off a political year, right? So we're more kind of like in the mid-3s in terms of an average of an odd and an even year in terms of leverage. But there's no -- we reassess that every year. We look at what our capital priorities are, what the market looks like, what the debt environment looks like in terms of looking at that. But we feel like our leverage is in a sustainable place at the current moment.

And just pivoting quickly back to the advertising environment. You said national advertising is pretty tough, branding is down. Some people might hear this, and of course, it's not an Nexstar dynamic. There's many companies saying that in the TV ecosystem. What's your view on that? Is that recoverable? Is it cyclical? Is that just a structural, "hey, branding isn't" -- because it's somewhat surprising, given you do have sports, you do have a tremendous amount of reach that national advertising is still so sluggish. So just any thoughts on, I don't know, the multiyear outlook for international advertising and TV.

Well, I think it starts with advertising is a cyclical business. It's the first thing to get cut when the economy slows, last thing to get restored as it's coming out. And I think that we're living through that right now. There's no structural impediment. I think that if I were in the streaming business, and then all of a sudden, Amazon and Netflix dump a ton of inventory onto the marketplace with static demand, then all of a sudden, you've got a huge crater in prices, which I think made a bad business an impossible business. So -- but no, I think from our perspective, new category development, rates coming down for people financing big-ticket items like appliances and automobiles, which is a lot of what we sell, those will all be good things in terms of building the business back. But I don't think it's something that goes to 0. I mean you can spend so much time and effort trying to be specific with your targeting, you can forget to build a brand. And I think of all purchasing kind of coming through a purchase funnel, right, where you need to be creating a brand at the top of the purchase funnel, and at the bottom, you can be very price and item specific. But you need to use television and digital assets to work in tandem as people work through their purchase funnel, making those decisions, whether it's for household goods or appliances or cars. And so I think the 2 assets that we concentrate on are TV and digital, and I think they complement each other very well through the purchase funnel. So I don't see -- I've been through the recessions that seem to happen about every 10 years. There's some business calamity that triggers a recession. And so from our perspective, if you have a long enough perspective, you know that this time it really isn't different, it's kind of just the newest version of the same.

Great point. Now you've met with investors this week. You just recently had earnings. You're running out of pure-play comps in the market. Some of them are just smaller, less successful, more debt-ridden, things like that. And then even in the public or the larger media companies, some of them are going away. So how should we think about what your business is worth and how to frame it? I mean, I think it's a more simple business is one of the pitches. It's a lot more simple to understand than many of the conglomerates in media. But yes, how would you like us to think about your business, who are the right peers? Or is it not about who the peers are?

Yes. I mean, look, I think you hit the point. I mean it's hard to comp us, but I think you think we're a media company, but I think we're like a best-in-class media company, right? We've got the most premium content that is available to be had. We've got a disciplined operating model. We generate a significant amount of free cash flow, which we're then returning to shareholders, both in the form of dividends and we're buying back almost 10% of our stock per year. So I think there's an embedded return just in that. There's the free cash flow. Recurring nature of our free cash flow is something that I think is really, really underappreciated. We've put up record first quarter, record second quarter revenues in the -- who else in the media industry has done that, right? And so I think we deserve a look. We're not a small company anymore. And I think a lot of times, people know us from the Nexstar of 10 years ago and not the Nexstar of 2024, when we were $5 billion of revenue and that much of a market cap.

Well -- and, yes, I credit you guys. You guys did some of the most incredible M&A, opportunistic M&A media has ever seen, 8 years ago when it began, and have thus, when everyone else -- when the big guys were either throwing money away on streaming or doing bad deals, you have not and you've bought back a lot of stock. So you've zigged when others have zagged in the media industry, and I think you do deserve a lot of credit for that, yes.

Well, thank you.

Well, thank you very much for joining us, and I think that's a wrap on our media conference. Love to have you back next year.

Thank you.