Nexstar Raises 2015/2016 Free Cash Flow Guidance to Reflect
Transaction Accretion, Ongoing Operating Strength of Existing Portfolio
and Recent Share Repurchase Activity
Nexstar
Broadcasting Group, Inc. (Nasdaq:NXST) (“Nexstar” or “the Company”)
announced today that it entered into a definitive agreement to acquire
the assets of four CBS-affiliated television stations serving the
Minot-Bismarck-Dickinson-Williston, North Dakota market (DMA #139) (“the
market”) for $44.0 million from Reiten Television, Inc. (“Reiten”). The
proposed acquisition is expected to be immediately accretive to
Nexstar’s operating results upon closing.
In addition, under the terms of the agreement, Nexstar will provide
sales and other services to the market’s two ABC-affiliated television
stations owned by Forum Communications (“Forum”) pursuant to Reiten’s
services agreement with Forum. Nexstar intends to finance the
transaction with cash generated from operations and borrowings under its
senior credit facilities.
The Minot-Bismarck-Dickinson-Williston television DMA is benefitting
from rapid economic expansion related to strong growth of the U.S.
domestic energy production industry in the region. From 2006 to 2015
Nielsen’s market rank for Minot-Bismarck-Dickinson-Williston has
ascended to DMA #139 from DMA #160, making it one of the fastest rising
DMAs in the country. According to the 2014 BIA Kelsey Television
Yearbook the Reiten television stations are the leading revenue share
cluster in the market.
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City of License
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Market Rank
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Station
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Affiliation
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1
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Minot, ND
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139
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KXMC
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CBS
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2
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Bismarck, ND
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139
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KXMB
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CBS
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3
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Dickinson, ND
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139
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KXMA
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CBS
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4
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Williston, ND
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139
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KXMD
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CBS
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5
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Minot, ND
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139
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KMCY*
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ABC
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6
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Bismarck, ND
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139
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KBMY*
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ABC
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* Forum-owned stations where Nexstar will provide sales
and other services.
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The planned acquisition of Reiten 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. 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 114 television stations serving 59
markets in 24 states, reaching approximately 20.4 million television
households or 18.0% of all U.S. television households.
Commenting on the acquisition, Nexstar Broadcasting Group President and
Chief Executive Officer, Perry A. Sook said, “The Reiten transaction
reflects the successful ongoing execution of Nexstar’s long-term growth
strategy to opportunistically expand our broadcast station and digital
media platform through accretive acquisitions. The Western North Dakota
market is a natural complement to our existing operations in the Upper
Midwest region of the United States and by adhering to our disciplined
transaction criteria, we are acquiring a leading portfolio of
market-leading television stations at an attractive pro-forma multiple
of approximately 6.2 times average 2015/2016 adjusted broadcast cash
flow, which is consistent with other recent Nexstar transactions. The
Reiten family’s legacy in the North Dakota television business dates
back nearly sixty years and consistent with our organization-wide
operating focus we intend to build on their rich tradition of localized
content and programming and community involvement.
“From 2009 to 2014 television and digital revenue in the
Minot-Bismarck-Dickinson-Williston, North Dakota market have grown by
61% and Reiten’s operations have generated consistent revenue and
broadcast cash flow growth, both year-to-date and on an historical
basis. Under Nexstar’s ownership, Reiten’s financial results will
benefit from our scale, proven operating disciplines, expense synergies
and growing net retransmission revenues. In this regard, the
acquisition, on a pro-forma basis, is expected to add an average of
approximately $0.15 per share of free cash flow per year to Nexstar’s
operating results over the 2015/2016 period.
“Nexstar’s consistent industry out-performance is the direct result of
our disciplined operating approach, revenue diversification initiatives
and the success we are achieving in identifying, efficiently financing
and integrating selective accretive station acquisitions. Pro-forma for
the completion of pending transactions as well as the year-to-date and
continued strength in our operating results and approximately one
million of share repurchases completed since the August 2015
authorization, we are increasing Nexstar’s projected 2015/2016 free cash
flow to approximately $467 million, or average pro-forma free cash flow
of approximately $7.62 per share per year, in this two year period based
on the current share count.
“Since the August 2015 authorization to repurchase up to $100 million of
Nexstar shares, the Company has repurchased approximately one million
shares at an average purchase price of approximately $48.10 per share.
We believe repurchasing shares at recent levels underscores our
confidence in the Company’s long-term prospects based on visible organic
and M&A-related growth opportunities. At the same time, our growing free
cash flow affords us the financial flexibility to continue pursuing
additional accretive transactions, while simultaneously reducing
leverage and returning capital to shareholders through the quarterly
cash dividend and share repurchases.”
The transaction is subject to FCC approval and other customary
approvals, and is expected to close in the late 2015 / early 2016. Kalil
& Co., Inc. served as the broker for the seller in the transaction.
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.
Reiten Television, Inc.
Reiten Television is a family owned and operated company that owns four
CBS affiliated television stations in the
Minot-Bismarck-Dickinson-Williston, North Dakota DMA and provides sales
and other services to two ABC affiliated stations owned by Forum
Communications in the DMA.
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 107 television stations and related digital multicast
signals reaching 58 markets or approximately 18.0% 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,
RTV, 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.
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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