Nexstar Media

Zack Fuss frames Nexstar as a rollup machine nearing the end of its runway — “sometimes the rollup can run out of runway” — because its organic growth drivers have “either tapped out, stalled out or are currently in decline.” McMillan details how Nexstar became the largest local-TV station group outside the Big Four (~200 stations, 116 markets, 68% population reach via LMA arrangements around the FCC’s 39% cap) through deals like Media General ($4.3B, 2017) and Tribune (2019).

The financials still screen like a value stock: ~$5.2B market cap, ~$12B EV, 3.5-4x net leverage, $5.5B 2024 revenue, ~$2B adjusted EBITDA (37% margin), with 50-60% of EBITDA converting to free cash flow. Revenue mix has flipped from ~75% advertising a decade ago to 55% distribution fees today — but McMillan warns the reverse-retrans give-back to networks is ~50% of those fees, “pushing to upwards of 60%,” and “trending in the wrong direction.”

Cord cutting has broken the old escape valve of raising rates on a shrinking base. Pay-TV households fell ~30% in a decade, from 100M to ~70M; traditional cable fell more than 50% to ~50M. YouTube — not Netflix — is the top disruptor, hitting 12% of big-screen TV viewing in April 2025, a fifth consecutive all-time high. “Everything is weakening for the TV ecosystem,” while cable companies “don’t care about the video product” anymore.

The last major bargaining chip is the NFL: “your local broadcast station is still by far the overwhelming way most Americans watch NFL games.” But the demo skews over 50, younger households skip pay TV entirely, and every point of leverage “is getting weaker every cycle” as networks pull sports onto streaming.

McMillan dismisses the two favorite bull cases: The CW and NewsNation are not yet material to earnings, and ATSC 3.0 is “a little more of a pipe dream” — a decade of limited progress because the industry never set a hard cutover date like the HD transition, TV makers skipped the receiver components, and encryption prevented DVR recording and casting. “The technology hasn’t panned out.”

The tradeable conclusion: in a melting-ice-cube industry, “capital allocation is not a strategy” — the smartest media operators were the ones who sold (Murdoch to Disney; AT&T outperforming Warner Bros. Discovery afterward). His own cautionary tale: he won the Ira Sohn idea competition in 2013 pitching Tribune long at $55; it ran over $100 on consolidation hype but last traded in the high 40s in 2019. “If you’re a broadcast investor, the best thing you could probably do is find a way to sell your assets to Nexstar because they’re going to be a buyer.”

🔗 Original source & video: Nexstar Media: Broadcasting’s Biggest Bet - [Business Breakdowns, EP.221]