Nexstar Media Group, Inc. (NXST): A Bull Case Theory

A tv broadcaster preparing a caller Spanish-language programme for its viewers.

Nexstar Media Group (NXST) is the largest section TV broadcaster successful the U.S., with 200 stations crossed 40 states, a 77% involvement successful The CW, a 33% involvement successful the Food Network, and a integer footprint reaching 103 cardinal monthly visitors. The concern operates done 2 superior gross streams: organisation fees from cable, satellite, and streaming aggregators, and advertizing gross from TV, integer platforms, and large events. While the accepted cablegram bundle is successful decline, streaming carriage offers a imaginable offset, though the semipermanent modulation remains uncertain.

Despite concerns implicit linear TV’s secular decline, NXST has demonstrated beardown fiscal performance. The institution generates unchangeable escaped currency travel (FCF) of astir $1 cardinal annually, with minimal capex requirements. Since 2016, it has repurchased 35% of its outstanding shares portion besides reducing debt, balancing assertive superior returns with fiscal prudence. With leverage trending downward and a disciplined superior allocation strategy, NXST’s buyback programme remains a almighty instrumentality to thrust shareholder value, assuming nary large shifts successful its manufacture dynamics.

Regulatory changes contiguous imaginable upside, peculiarly with incoming FCC enactment nether Brendan Carr. If ownership rules are relaxed, NXST could prosecute further acquisitions, leveraging outgo synergies to heighten profitability. Historically, the institution has executed transformative M&A, astir notably with Media General successful 2017 and Tribune successful 2019. However, regulatory constraints person curtailed further dealmaking, forcing NXST to absorption connected integrated maturation and superior returns.

At existent levels, NXST trades astatine conscionable 5.4x FCF and 11.8x EV/FCF, reflecting the market’s skepticism toward bequest broadcasters. Cable TV subscribers person declined from 105 cardinal successful 2010 to 66 cardinal today, with virtual subscribers lone partially offsetting losses. If subscriber declines stabilize and NXST maintains an mean of $850 cardinal successful yearly FCF implicit the adjacent 5 years, it could repurchase different 35% of its shares, driving FCF per stock to $43. A humble 6x aggregate would connote a valuation of $258 per share, representing a ~10% IRR.