Nexstar's cash surge is cutting debt. What survives election season?
The broadcaster has repaid $1.31 billion this year. Strong political advertising and a swing in payment timing help explain the pace.
Nexstar is using a rush of television advertising cash to bring down the debt it took on around its TEGNA acquisition. By November 5, debt repayments for the year had reached $1.31 billion, including $525 million paid after the third quarter ended.
The television broadcaster's results show why the pace has picked up. Election advertising and a full quarter of TEGNA helped operating cash flow reach $680 million. But the timing of receipts and payments also gave that number a substantial lift.
Two measures tell different cash stories
After $46 million of capital spending, Nexstar reported $634 million of free cash flow. Its adjusted version was lower, at $443 million, largely because it removes the cash benefit from working capital, such as changes in customer receivables and unpaid bills.
Research by Ticker Byline shows that this working-capital effect changed direction between quarters: it absorbed $39 million in the June quarter and supplied $258 million in September. That swing helps explain why operating cash more than doubled from June while the adjusted measure rose less sharply.
| Measure | June quarter | September quarter |
|---|---|---|
| Operating cash flow | $298 | $680 |
| Free cash flow after capital spending | $253 | $634 |
| Adjusted free cash flow | $238 | $443 |
The adjusted calculation also changes the treatment of transaction expenses, taxes, pension items and other amounts.
Election ads are doing some of the heavy lifting
Revenue reached $2.13 billion, up from $1.20 billion a year earlier. TEGNA contributed $765 million of the increase. Political advertising totaled $317 million, compared with $10 million in the earlier year's smaller business.
At Nexstar's legacy broadcast operations, political advertising increased by $163 million while nonpolitical advertising fell by $18 million. Management attributed the latter decline to political ads crowding out other advertisers and continued market softness.
Those results support chief executive Perry A. Sook's August expectation of strong second-half cash generation. The full half is still underway, and the election cycle makes the latest quarter a demanding benchmark for future advertising sales.
The acquisition is paying in, but integration is restricted
Nexstar completed the TEGNA acquisition in March. A subsequent preliminary injunction restricts further integration, and Nexstar had already removed expected merger savings from its leverage calculations in August. The latest report says appeal arguments are scheduled for November 17 and trial for July 2027.
Debt remains substantial. At September 30, consolidated outstanding principal was $11.53 billion, with $446 million of cash. Those balances include independently owned Mission Broadcasting, which Nexstar consolidates for accounting purposes, and precede the extra $525 million of repayments.
The next test is how much debt Nexstar can retire once election advertising subsides, while the integration restrictions remain. The Nexstar company profile tracks its cash generation, borrowing terms and acquisition developments.